A Pivotal Week for Tesla: Earnings and Strategy in Focus

Tesla Inc. faces a critical juncture as it prepares to report its quarterly results on January 28. The figures for Q4 2025 are anticipated to reveal a sharp decline in profitability, coinciding with a fundamental strategic shift in the company's approach to its autonomous driving technology.

Market consensus, compiled from estimates by 19 investment banks including Wedbush Securities, UBS, Wells Fargo, and Morgan Stanley, points to significant pressure on Tesla's bottom line. Analysts project revenue of $24.5 billion for the quarter, with $17.3 billion generated from the automotive segment. The adjusted earnings per share estimate stands at $0.44, representing a potential year-over-year drop of up to 40%.

Looking ahead to the full 2026 fiscal year, experts forecast total revenue of $104 billion and vehicle deliveries reaching 1.72 million units. The Model 3 and Model Y are expected to account for approximately 1.6 million of those deliveries.

A New Paywall for Autonomous Features

In a major business model change, Tesla has eliminated its standard Autopilot feature in the United States and Canada. New vehicles will now come equipped only with basic cruise control. Access to lane-keeping and Autosteer functionalities requires a monthly subscription to the Full Self-Driving (Supervised) package, priced at $99.

The one-time purchase option for FSD, previously available for $8,000, will be discontinued after February 14. CEO Elon Musk has indicated that the subscription price will increase as the system's capabilities advance. He described the "massive value increase" as being tied to the future achievement of unsupervised driving, where occupants could sleep or use their phones during transit.

Currently, only 12% of Tesla owners pay for FSD. Boosting this adoption rate is a pressing corporate priority, as 10 million active FSD subscriptions are linked to the conditions of Musk's $1 trillion compensation package.

Should investors sell immediately? Or is it worth buying Tesla?

Ambitious Timelines from Davos

During the World Economic Forum in Davos, Musk outlined aggressive goals for the company's future. He stated that a driverless robotaxi service should achieve very widespread deployment across the United States by the end of 2026. Furthermore, Tesla plans to begin selling its Optimus humanoid robots to consumers by the end of 2027. The company also expects to receive regulatory approval for FSD in Europe within a matter of weeks.

Tesla is already operating a robotaxi service without a safety driver in Austin, Texas, marking a key milestone for its autonomy ambitions. Some insurance providers have begun offering FSD users premiums at half the standard rate.

Valuation Concerns and External Risks

Tesla shares currently trade near $450. The stock is valued at approximately 200 times its expected earnings, with a price-to-sales ratio of 16.5. Barclays maintains a neutral rating on the equity, recently raising its price target from $350 to $360—still significantly below the current trading level.

External risks add to the uncertainty. At Davos, Musk criticized high solar tariffs implemented under the previous Trump administration and warned about artificially inflated energy costs. The threat of new tariffs on Canada and broader geopolitical tensions contribute to a challenging operating environment.

The quarterly report on January 28 will be a key test of whether Tesla's narrative around artificial intelligence and autonomy can continue to satisfy investors amidst declining profits and intensifying competition.