Earny Asks: Do You Even Know How Tesla Makes Money?

Tesla

We’ve all seen the electric vehicles made by Tesla TSLA. ~~Founder~~ Technoking Elon Musk has kept himself and the company at the center of attention for many years, and we've all got opinions about the company.

But do you even know what Tesla does?

Most people will tell you that they make cars. Elon will probably tell you that they’re an AI company. Both of those are only part of the story.

This week, Earny asks: What does Tesla do to earn money?

Select all that are correct:

Make cars
Generate and store energy
“Services”
Make burgers
Robots and robotic cars
Get piles of money from the government in the form of regulatory credits

Answer

Tesla announced second quarter 2025 earnings a little over a week ago, on Wednesday, July 23rd. The earnings were a disappointment, as expected. Elon’s foray into politics has alienated many customers, at the same time that some really great EVs have been released by competitors (yes, there are great EVs for sale).

The stock dropped by around 10% and, as I’ve said before, fans of the EV company’s stock would’ve been better off owning an index fund for the last 5 years! Maybe they’ll be rewarded in the future, but maybe not. It’s a risky play.

Tesla has also offered lots of great news this summer. News of products that they hope will drive future revenues. While I have no insight into whether those products will drive revenues, all I do know is that investors are skeptical. Since the summer started in June, Tesla shares are basically unchanged.

And what products were announced? A restaurant! Yes, you can buy Tesla burgers in LA. I’ve heard that they’re not bad, but McDonalds has nothing to worry about. This appears to be more of a marketing stunt than a shift to making supercharging stations into burger joints.

Tesla has also announced full self driving robotaxis. I have a Tesla Model 3 that can drive itself and it drives about as well as a nervous teenager. It’s not ready for prime time. But, it will be. Some time in the future, robotaxis will be a significant source of revenue to the company. Just not yet.

So, what does Tesla do to make money?

Tesla claims to be an AI company, so I asked Chat GPT.

Here’s what it said:

“Tesla makes money through several business activities, primarily focused on electric vehicles, energy products, and related services. Here's a breakdown of Tesla's main revenue streams:

Electric Vehicle (EV) Sales
Regulatory Credits
Energy Generation and Storage
Services and Other
Software and Connectivity

While ChatGPT didn’t give dollar figures, it did tell me what percentage of revenues was provided by each of those categories

Vehicle sales were 80%, Energy Generation 6-8%, Services 7-10%, and Regulatory Credits 2-4%.

That’s not a bad answer ChatGPT!

But there’s an even better source. Tesla, like every publicly traded company has an Investor Relations site.

Here’s Tesla’s.

I’ve spent a little time reading the company’s Q2 2025 Quarterly Update Deck and here’s what I’ve found.

Under Tesla’s Financial Summary, they list the following categories:

Automotive Revenues
Energy Generation and Storage Revenue
Services and Other Revenue

On page 24 of that document, I learned that regulatory credits are accounted for under Automotive Revenues. Software and Connectivity is probably included there, too. I pay money to Tesla every month to keep my car up-to-date with the latest software and traffic reports.

Here are the numbers (highlighted), so we can see what Tesla really does:

What we see is that the Automotive business is down a lot in 2025. Q2 showed a rebound from Q1, but it was still poor. Only the leasing business was relatively stable. The other units, Energy Generation and Services, were also stable.

I remember back when Apple's iPod first came out. It was fun to watch Apple’s quarterly results grow as the iPod, and then the iPhone began to dwarf Apple’s computer business. The company went from being a computer company to a phone company, and now a company that offers so much more. Apple of today looks little like the Apple of 20 years ago. Companies change!

As Elon Musk continues to talk about an AI future, I would expect that a specific AI-related business would pop up and be shown on the company’s results, at least as a line item within Automotive or one of the other key business lines. And you’ll be able to find that information within the company’s quarterly reports.

For now, Tesla is a car company, and sales of its main product are in decline. Can they turn it around?