Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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Profitability Ratios (Summary)
Tesla Inc., profitability ratios
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The profitability metrics demonstrate a period of initial expansion followed by a noticeable contraction. From 2021 to 2022, all reported ratios increased, indicating improved profitability. However, beginning in 2022, a consistent decline is observed across all metrics, with 2023 showing the beginning of a more significant downturn that continues through the projected figures for 2024 and 2025.
- Gross Profit Margin
- The gross profit margin exhibited a slight increase from 25.28% in 2021 to 25.60% in 2022. Subsequently, it decreased substantially to 18.25% in 2023 and remained relatively stable, fluctuating between 17.86% and 18.03% for 2024 and 2025. This suggests increasing costs of goods sold relative to revenue.
- Operating Profit Margin
- The operating profit margin followed a similar pattern to the gross profit margin, increasing from 12.12% in 2021 to a peak of 16.76% in 2022. A more pronounced decline then occurred, falling to 9.19% in 2023, 7.24% in 2024, and further to 4.59% in 2025. This indicates increasing operating expenses or decreasing revenue, or a combination of both.
- Net Profit Margin
- The net profit margin mirrored the trends of the gross and operating profit margins, rising from 10.25% in 2021 to 15.41% in 2022, then declining to 15.50% in 2023 before a sharper decrease to 7.26% in 2024 and 4.00% in 2025. This suggests that factors beyond core operations, such as interest expense or taxes, are also contributing to the reduced profitability.
- Return on Equity (ROE)
- Return on equity experienced substantial growth from 18.28% in 2021 to 28.09% in 2022. However, it then decreased to 23.94% in 2023, followed by a significant drop to 9.73% in 2024 and 4.62% in 2025. This decline indicates a diminishing ability to generate profit from shareholder investments.
- Return on Assets (ROA)
- Return on assets followed a similar trajectory to ROE, increasing from 8.88% in 2021 to 15.25% in 2022, then decreasing to 14.07% in 2023, 5.81% in 2024, and 2.75% in 2025. This suggests a decreasing efficiency in utilizing assets to generate earnings.
Collectively, these ratios indicate a weakening profitability position. The consistent downward trend across all metrics from 2022 through 2025 warrants further investigation into the underlying causes, such as increased competition, rising input costs, or declining sales volume.
Return on Sales
Return on Investment
Gross Profit Margin
Tesla Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Ford Motor Co. | ||||||
| General Motors Co. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The gross profit margin exhibited initial growth followed by a significant decline and subsequent stabilization. Gross profit increased from US$13,606 million in 2021 to US$20,853 million in 2022, before decreasing to US$17,660 million in 2023. This trend continued with further reductions to US$17,450 million in 2024 and US$17,094 million in 2025.
Revenues demonstrated consistent growth through 2023, increasing from US$53,823 million in 2021 to US$96,773 million in 2023. However, revenue growth slowed in 2024, reaching US$97,690 million, and experienced a slight decrease in 2025 to US$94,827 million.
- Gross Profit Margin Trend
- The gross profit margin initially increased from 25.28% in 2021 to 25.60% in 2022. A substantial decrease was then observed, with the margin falling to 18.25% in 2023. This decline continued to 17.86% in 2024. The margin showed a slight recovery in 2025, reaching 18.03%, indicating a potential stabilization, though remaining significantly below the levels observed in 2021 and 2022.
The divergence between revenue and gross profit trends suggests increasing costs of goods sold as a percentage of revenue. While revenues continued to rise through 2023, the decreasing gross profit margin indicates that the cost of producing those revenues increased at a faster rate. The stabilization of the gross profit margin in 2025, despite a slight revenue decrease, could suggest a leveling off of cost pressures or the implementation of cost control measures.
- Key Observations
- The period between 2022 and 2024 witnessed a notable erosion of profitability as measured by the gross profit margin. The slight improvement in 2025 does not fully offset the earlier declines. Further investigation into the components of cost of goods sold would be necessary to understand the drivers behind this trend.
Operating Profit Margin
Tesla Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Income from operations | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Ford Motor Co. | ||||||
| General Motors Co. | ||||||
| Operating Profit Margin, Sector | ||||||
| Automobiles & Components | ||||||
| Operating Profit Margin, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Operating profit margin = 100 × Income from operations ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The operating profit margin exhibited a fluctuating pattern over the five-year period. Initially, a substantial increase was observed, followed by a consistent decline.
- Operating Profit Margin Trend
- In 2021, the operating profit margin stood at 12.12%. This figure rose significantly to 16.76% in 2022, representing the highest margin observed during the analyzed timeframe. However, subsequent years witnessed a downward trend. The margin decreased to 9.19% in 2023, further declining to 7.24% in 2024, and reaching 4.59% in 2025.
The increase in operating profit margin from 2021 to 2022 coincided with a considerable rise in revenues. However, despite continued revenue growth in 2023 and 2024, the operating profit margin decreased, suggesting that the rate of cost increases exceeded the rate of revenue increases during those periods. The continued decline into 2025 indicates this trend persisted, even with a slight decrease in revenue.
- Relationship to Income from Operations
- Income from operations increased from US$6,523 million in 2021 to US$13,656 million in 2022, supporting the improved margin. However, income from operations then decreased to US$8,891 million in 2023, US$7,076 million in 2024, and US$4,355 million in 2025. This decline in operational income directly contributed to the decreasing operating profit margin.
The consistent decrease in operating profit margin from 2022 through 2025 warrants further investigation into the underlying cost structure and pricing strategies. While revenue continued to grow for a period, the diminishing profitability suggests potential challenges in maintaining cost control or pricing power.
- Revenue Impact
- Revenues increased from US$53,823 million in 2021 to US$81,462 million in 2022 and peaked at US$96,773 million in 2023. Revenues remained relatively stable at US$97,690 million in 2024 before decreasing slightly to US$94,827 million in 2025. The fact that the operating profit margin declined despite revenue increases in 2023 and 2024 highlights the significance of cost management.
Net Profit Margin
Tesla Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to common stockholders | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Ford Motor Co. | ||||||
| General Motors Co. | ||||||
| Net Profit Margin, Sector | ||||||
| Automobiles & Components | ||||||
| Net Profit Margin, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Net profit margin = 100 × Net income attributable to common stockholders ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The net profit margin exhibited a notable increase between 2021 and 2023, followed by a significant decline in subsequent years. This analysis details the observed trends and potential implications.
- Net Profit Margin Trend
- In 2021, the net profit margin stood at 10.25%. This figure rose substantially to 15.41% in 2022, and continued to increase, reaching a peak of 15.50% in 2023. However, a marked reversal occurred in 2024, with the net profit margin decreasing to 7.26%. This downward trend accelerated in 2025, with the margin falling further to 4.00%.
The period from 2021 to 2023 demonstrates a strengthening of profitability, as evidenced by the increasing net profit margin. This suggests improved cost management, pricing strategies, or operational efficiencies during those years. The subsequent decline in 2024 and 2025 indicates a weakening of profitability. This could be attributable to factors such as increased competition, rising input costs, pricing pressures, or a shift in sales mix towards lower-margin products.
- Relationship to Revenue
- While revenues continued to increase from 2021 to 2024, the decline in net profit margin in 2024 and 2025 suggests that revenue growth was not translating into proportional profit growth. Revenues experienced a slight decrease in 2025, coinciding with the lowest net profit margin observed during the analyzed period. This correlation warrants further investigation into the underlying drivers of both revenue and profitability.
The substantial decrease in net profit margin from 2023 to 2025 represents a significant shift in the company’s financial performance. Continued monitoring of this metric, alongside a detailed analysis of the factors influencing it, is crucial for understanding the long-term sustainability of profitability.
Return on Equity (ROE)
Tesla Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to common stockholders | ||||||
| Stockholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Ford Motor Co. | ||||||
| General Motors Co. | ||||||
| ROE, Sector | ||||||
| Automobiles & Components | ||||||
| ROE, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
ROE = 100 × Net income attributable to common stockholders ÷ Stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Equity (ROE) exhibited a fluctuating pattern over the five-year period. Initial increases were followed by a significant decline.
- Overall Trend
- ROE demonstrated substantial growth from 2021 to 2022, peaking at 28.09%. However, subsequent years reveal a consistent downward trend, culminating in a value of 4.62% in 2025. This indicates diminishing profitability relative to shareholder equity.
- Net Income Impact
- Net income attributable to common stockholders increased significantly from 2021 to 2022, driving the initial surge in ROE. While net income continued to rise in 2023, the rate of increase slowed, and ROE followed suit. The substantial decrease in net income in 2024 and 2025 directly contributed to the observed decline in ROE.
- Equity Influence
- Stockholders’ equity consistently increased throughout the period. While rising equity generally indicates financial strength, its impact on ROE was offset by the fluctuations in net income. The increasing equity base, coupled with declining net income, resulted in a lower ROE in the later years.
- Year-over-Year Changes
- The largest year-over-year increase in ROE occurred between 2021 and 2022, with an increase of 9.81 percentage points. The most substantial decrease was observed between 2023 and 2024, representing a decline of 14.21 percentage points. The decrease from 2024 to 2025 was 5.11 percentage points, continuing the downward trajectory.
The observed trend suggests that while the company has been increasing its equity base, its ability to generate profits from that equity has been decreasing in recent years. Further investigation into the factors driving the decline in net income is warranted.
Return on Assets (ROA)
Tesla Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to common stockholders | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Ford Motor Co. | ||||||
| General Motors Co. | ||||||
| ROA, Sector | ||||||
| Automobiles & Components | ||||||
| ROA, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
ROA = 100 × Net income attributable to common stockholders ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Assets (ROA) exhibited a fluctuating pattern over the five-year period. Initially, a substantial increase was observed, followed by a decline in subsequent years.
- Overall Trend
- The ROA demonstrated a strong upward trajectory from 2021 to 2022, increasing from 8.88% to 15.25%. This positive momentum continued into 2023, albeit at a slower pace, reaching 14.07%. However, beginning in 2023, the ROA experienced a consistent downward trend, decreasing to 5.81% in 2024 and further to 2.75% in 2025.
- Net Income Impact
- Net income attributable to common stockholders increased significantly from 2021 to 2023, contributing to the initial rise in ROA. However, net income decreased substantially in 2024 and 2025, which directly influenced the subsequent decline in ROA.
- Asset Base Impact
- Total assets increased consistently throughout the period, growing from US$62,131 million in 2021 to US$137,806 million in 2025. While asset growth typically supports increased profitability, the declining net income offset this effect, resulting in a decreasing ROA. The rate of asset growth exceeded the rate of net income growth in the later years, exacerbating the ROA decline.
The diminishing ROA suggests a decreasing efficiency in utilizing assets to generate profit. While the company continued to expand its asset base, its ability to translate those assets into net income diminished over the observed period.