Last July, Musk alerted investors that Tesla would likely have a “few rough quarters” of car sales.

The latest deliveries and production update, released on January 2, reaffirmed that the company isn’t out of the woods yet. Tesla delivered 418,227 cars in the last three months of 2025, a 15% drop from a year earlier.

Much of the quarterly drop was expected. The federal government’s $7,500 tax credit for new EV buyers expired in the third quarter, prompting some Tesla shoppers to pull forward purchases. However, even with that Q3 bump, Tesla’s full-year vehicle deliveries fell 8.6% compared with 2024.

Tesla recently restarted development of Dojo 3, its in-house AI training supercomputer — but with a twist. Instead of only training self-driving cars, Musk said the new system is aimed at “space-based AI compute.”

In August, Tesla shut down Dojo and disbanded the team, planning to rely on chips from Nvidia and other partners instead. But on January 18, Musk posted on X that Tesla’s Samsung and TSMC-built AI5 chip was now “in good shape,” making it possible to resurrect the project.

Elon Musk first revealed Tesla’s second-generation Roadster — a two-door electric supercar with a blistering 1.9-second 0-60 mph time — in 2017. While the company has collected thousands of $50,000 reservations for the racer, every earnings deck since 2020 has listed the vehicle as in “development.”

Some customers are getting frustrated with a lack of progress, with several high-profile reservation holders like Sam Altman and Marques Brownlee canceling their reservations. But there’s recent momentum building around the Roadster, Business Insider’s Grace Kay reported

During an interview with Joe Rogan, Musk said the car’s next reveal will be on April Fools Day. He added that the car will include parts built by SpaceX and teased that it might be capable of some fancy tricks, calling it “the most memorable product unveil ever.”

The CEO typically avoids making product announcements during earnings calls, so we likely won’t get a major reveal today. But we’ll be looking to see how the model is listed on the earnings deck later today.

Chinese EV maker BYD sold more cars than Tesla last year — and it wasn’t even close.

The Shenzhen-based automaker delivered more than 2.26 million battery-electric cars to global consumers. Tesla sold 1.65 million in the same time.

“The story is that 2025 marks the year Tesla lost the BEV crown to BYD,” Howard Yu, a professor at IMD Business School, wrote to Business Insider. “And not by a little. It’s a 620,000-unit gap that didn’t exist two years ago.”

Tesla’s best-selling cars — the Model Y and the Model 3 — both received facelifts in early 2025. The design updates added LED light bars on the headlight and taillight, sharper body angles that increased battery range, and more ambient lighting on the interiors.

In the auto industry, design refreshes typically trigger months of growing sales. For Tesla, however, sales have continued to slide.

Musk is known for his optimistic timelines, and Tesla’s robotaxi rollout is no exception.

The billionaire predicted that by the end of 2025, Tesla’s robotaxi service would be operating in 8-10 metro cities, cover half the US population, and have 500 vehicles on the road in Austin.

Tesla didn’t hit any of those targets. It did, however, remove safety drivers from its vehicles in Austin this month. Tesla is planning to launch robotaxis in multiple US cities this year, and investors will be watching the earnings call closely for any updates.

Analysts at JPMorgan lowered their EPS estimate for Tesla to $0.43 from $0.48 after the carmaker missed its fourth-quarter delivery target. Tesla recently reported a 16% year-over-year drop in deliveries for the fourth quarter.

“The -16% y/y decline in 4Q25 deliveries is the worst ever for Tesla,” analysts wrote in a recent client note, adding that Tesla’s stock price looked “increasingly divorced” from the company’s “rapidly declining earnings outlook.”

The bank reiterated its “underweight” rating on Tesla and $150 price target, implying 65% downside from the stock’s current levels.

Wells Fargo said it remains pessimistic about Tesla’s business fundamentals. The bank said it believed the company would continue to see “moderating delivery growth” this year, pointing to lower demand for Teslas and diminishing returns on the company’s price cuts.

“2026 Fundamentals look weak, leaving no support if Robotaxi/Optimus disappoint,” analysts wrote in a client note.

The bank reiterated its “underweight” rating on the stock but lifted its price target to $130 a share, citing updated growth estimates for Tesla’s car business. The price target implies 70% downside from Tesla’s current levels.

Tesla’s sales in the US, China, and Europe fell sharply in 2025 — and in January it reported its second consecutive annual sales decline. Still, the automaker’s stock has jumped to near record highs, boosted by optimism around self-driving and AI.

“The market doesn’t seem to place much emphasis on Tesla’s current automotive business, even as deliveries are declining,” Seth Goldstein, an analyst at Morningstar who closely monitors Tesla, told Business Insider.

Tesla stock looks like it’s already largely priced in the bull case, which relies on the success of the company’s robotaxi business and Optimus, Tesla’s humanoid robot. But returns for those projects may not be realized in the near future, UBS analysts said.

“So in our view, given a declining valuation for TSLA’s EV business, the market is already assigning a higher and higher value to the AI ventures. While the TAM for these ventures may be large, they could also be further out,” the bank wrote.

UBS issued a “sell” rating and a $247 price target, implying 43% downside from current levels.

Tesla’s progress on AI has been “slower than anticipated,” Oppenheimer said.

The firm pointed to continued progress Tesla would need to make before beginning the production of Optimus, and the expectation that the company will roll out robotaxis in more cities across the US this year.

“We see downside risk to 2026 consensus as we continue to anticipate delays in Robotaxi performance and Optimus ramp in context of a challenging EV demand environment for TSLA,” the firm wrote.

Analysts issued a “perform” rating on Tesla and trimmed their fourth-quarter revenue estimates from $24.08 billion to $23.7 billion.

Cantor analysts highlighted potential catalysts that could boost Tesla’s stock down the line, like the company rolling out full self-driving in China and Europe, expanding its robotaxi presence across the US, and launching Optimus commercially in 2027.

The firm’s analysts reiterated its “overweight” rating on the stock and set a $510 price target, implying 17% upside from Tesla’s current levels.

Wedbush, a longtime Tesla bull, remains optimistic about Tesla’s AI and robotics projects.

The research firm said it believed Tesla could hit a $2 trillion valuation in the next year as the company begins “full scale volume production” of some of its autonomous and robotics products.

“We believe Tesla will own ~70% of the global autonomous market over the next decade as no other company can match the scale and scope of Tesla coupled with its broadening AI footprint,” a team led by Dan Ives wrote in a note.

The firm reiterated its “outperform” rating and issued a $600 price target on Tesla, implying 38% upside from current levels.

Fourth Quarter

• Adjusted EPS estimate 45c (Bloomberg Consensus)
• EPS estimate 34c
• Revenue estimate $25.11 billion
• Gross margin estimate 17.1%
• Operating income estimate $1.32 billion
• Free cash flow estimate $1.59 billion
• Capital expenditure estimate $2.83 billion

Source: Bloomberg data

The Fed may be holding rates steady, but the central bank did make a notable change to its economic picture this month. In Wednesday’s news release, FOMC leaders removed the phrase “downside risks to employment rose in recent months,” which has been included in almost every release from the past few months.

The committee said that job gains remain low and inflation is still somewhat elevated, but removing the “downside risks to employment” phrase from the Fed’s economic assessment is good news for job seekers. It means Powell and company see a labor market in recovery.

Powell will begin the Fed’s January press conference at 2:30 p.m. He will give an overview of the current economic situation, including the inflation and employment data the Fed is closely watching.

The central bank chair will then take questions from journalists. We expect Powell will be asked about the DOJ probe, ongoing political pressure from the Trump administration, tariffs, the impact of AI on the job market, and more. Powell’s answers could foreshadow future monetary policy and plans for his final months at the Fed.

Major indexes were flat after the Fed opted to keep interest rates unchanged.

“Focus, naturally, now turns to Chair Powell’s press conference,” wrote Michael Brown, senior strategist at Pepperstone. “Powell will likely, again, note that the FFR is now within a reasonable range of estimates as to where the neutral rate may lie, though will probably steer well clear of any questions on his plans post-May, or on ongoing attempts to erode the Fed’s policy independence.”

The S&P 500 was in the red after the decision, reversing an earlier rally that had brought the benchmark index above 7,000 for the first time ever.

The committee has had a split on interest rates at every meeting since July — and this month is no different. Ten FOMC members, including Powell, voted in favor of the hold, but there were two dissents. Stephan Miran and Christopher Waller preferred a quarter-point cut.

The Fed will hold its benchmark interest rate steady between 3.5 and 3.75%, in alignment with expectations. The move breaks a pattern of rate cuts over the past several months. Powell will hold a press conference at 2:30 p.m. ET to discuss.

Central bank decisions trickle down to consumers through mortgage and credit card rates, auto loans, and savings accounts. The borrowing rates for these typically follow the same pattern as the Fed. Higher interest rates can help curb rising prices, but still-high borrowing costs could push companies toward layoffs or hiring freezes over time. It’s unlikely Americans will feel the impact of a single rate call, but sustained cuts or hikes can have an effect over time.

The typically uniform Fed has been increasingly divided in its decisions. At the December meeting, the FOMC had its most split call since September 2019 with three dissents. Recent Trump appointee Stephen Miran repeatedly voted for steeper rate cuts last year. Others, like Jeffrey R. Schmid, urged a more cautious stance.

It’s possible that January’s rate call will be another split decision for the committee.

Top contenders to succeed Powell include former Fed Governor Kevin Warsh, Chief Investment Officer of global fixed income at BlackRock Rick Rieder, Trump’s economic advisor Kevin Hassett, and Fed Governor Christopher Waller. Rieder is leading prediction markets.

Treasury Secretary Scott Bessent is in charge of the process, though any nominees are likely to hit roadblocks in Congress over the DOJ probe.

“The hope is that whoever takes Powell’s role next will be similarly data driven and level headed,” Elizabeth Renter, the senior economist at NerdWallet, said. “A Fed that is vulnerable to political pressure is one that will struggle to be effective at guiding economic stability.”

Read full story

Trump has been vocal about his desire for lower interest rates, threatening to fire Powell and dubbing him with the moniker “Too Late.” The president told The Wall Street Journal earlier this month that he hopes the next Fed chair will consult with him more closely on monetary policy. “I’m a smart voice and should be listened to,” he said.

Trump added in his Davos speech that he’s interviewing potential Powell successors: “Everyone that I interviewed is great. Everyone could do, I think, a fantastic job,” he said, continuing, “It’s amazing how people change once they have the job. It’s too bad, sort of disloyalty.”

Stocks were steady ahead of the rate decision and Jerome Powell’s press conference. The S&P 500 pulled back from its record above 7,000 as the tech-led rally stuttered. Markets will be listening closely for updates from Powell on where he sees interest rates going through the rest of his term, but also any clues that could hint at what his successor might do.

“Markets expect Chair Powell to end his leadership term without cutting rates again. They also believe that his successor will be similarly cautious, with heavy odds (+70 percent) that Fed Funds will be within 25 basis points of 3.0 percent in December 2027,” wrote Nicholas Colas, co-founder of DataTrek Research, on Wednesday.

Both the DOJ probe and Cook case have sparked widespread concern over the Fed’s future, as the bank has long operated as independent and nonpartisan.

Ten heads of various world banks released a letter defending Powell, as did a group of state-level treasurers and auditors.

“We stand in full solidarity with the Federal Reserve System and its Chair Jerome H. Powell,” the letter from global bank leaders read. “The independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve.”

The Trump administration accused Fed Governor Lisa Cook of mortgage fraud in August and attempted to fire her, though she has remained in her seat. Her case was heard by the Supreme Court last week, and several judges expressed disagreement with the White House.

“Your position that there’s no judicial review, no process required, no remedy available, very low bar for cause, that the president alone determines — and that would weaken, if not shatter, the independence of the Federal Reserve,” said Justice Brett Kavanaugh, a Trump appointee.

Powell attended oral arguments for the case in support of Cook, but did not give testimony.

The DOJ probe around Powell’s testimony about the Fed renovations is ongoing. Markets and political leaders will be watching Powell’s comments in this afternoon’s press conference closely. Beyond posting the uncharacteristic video message online to announce the subpoena, he hasn’t spoken publicly about the investigation.

The effective import tariff rate has spiked to the highest in decades.

Experts have been keeping an eye on just how much tariffs have affected inflation. Elizabeth Renter, senior economist at NerdWallet, said it’s challenging to know the extent to which tariffs have had an effect because there are other headwinds, such as supply chain and inventory issues. Jason Draho, the head of asset allocation Americas for UBS Global Wealth Management, said tariffs had some effect on goods inflation, but hadn’t resulted in a massive surge.

The Supreme Court has yet to rule on the legality of tariffs imposed by the Trump administration using the International Emergency Economic Powers Act.

US stocks cruised to records at the open on Wednesday, with the S&P 500 hitting 7,000 for the first time ever. Traders were bracing for the Fed decision, as well as critical earnings updates from mega-cap tech. Tesla, Meta, and Microsoft are due to report fourth-quarter earnings after the closing bell.

Markets are broadly expecting to rates to remain unchanged today. The CME FedWatch Tool shows 97% odds of the target rate remaining in the range of 3.5-3.75%. Views on Wall Street are also mixed on whether the market can expect one or two cuts in 2026.

Glen Smith, chief investment officer at GDS Wealth Management, said, “we expect just one rate cut for 2026, and while the timing of this next rate cut is debatable, it will likely come towards the second half of the year” with a new Fed chair.

Fed members can look back at last year’s inflation to inform their coming interest rate decision. The inflation rate, based on the consumer price index, ended 2025 lower than it started but remained above the Fed’s 2% target.

The year-over-year percent change in the shelter index continued to cool from its 2023 peak.

The unemployment rate has been at least 4% since June 2024, and ended 2025 at 4.4%. This is historically low, but it comes alongside limited vacancies, low hiring rates, and a decline in the number of Americans quitting their jobs or changing roles compared to a few years ago.

Daniel Zhao, the chief economist at Glassdoor, said last year’s job market ended “with a fizzle rather than a bang.” The US added 584,000 jobs in 2025, the lowest since 2003, outside recessions.

Economists and job-market experts told Business Insider that the job market was in a low-fire, low-hire environment, partly due to economic uncertainty and reduced demand after the pandemic recovery and the Great Resignation.

It’s likely Fed leaders will stick to the status quo in January, in hopes that steady rates will push inflation closer to their 2% goal. Affordability is a major concern for American households, as prices rise on housing, groceries, healthcare, and more. Powell has consistently prioritized price stability during his time as chair.

The Fed is expected to cut rates at least once later this year, a move that could ease costs for borrowers and juice the job market.

Powell’s term as chair ends in May, but he’s eligible to remain on the Fed committee until early 2028. It’s rare for former chairs to stay on as governors, and Powell has not indicated his plans.

But there’s been some speculation from Wall Streeters that Trump’s threats to the Fed could entice Powell to remain at the bank longer than expected.

The DOJ probe news sparked alarm among politicians, economists, and business leaders, many of whom are concerned about the future of the central bank. Powell’s term as chair expires in May, and Trump is set to announce his next pick for the role in the coming weeks.

Both Democratic and Republican leaders have signaled the probe jeopardizes the search for Powell’s successor.

“If there were any remaining doubt about whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none,” North Carolina Sen. Thom Tillis said, adding that he will oppose any Trump nominees to the central bank until “this legal matter is fully resolved.”

With around 7.5 hours until the Fed’s latest rate decision is announced, things are a bit of a mixed bag in financial markets on Wednesday.

As of 6:30 a.m. ET futures for the three major US indexes are trending higher, with the Nasdaq leading the way, signaling a nearly 1% rise at the open. That’s due in large part to its tech focus, with many of the biggest tech firms reporting earnings this week.

Elsewhere, futures for the S&P 500 are 0.4% higher, while the Dow Jones is up less than 0.1%.

In Europe, where markets are open, stocks are a little lower, with the UK’s FTSE 100 benchmark down 0.5%, and Germany’s DAX falling 0.2%.

Gold’s record rally is continuing on Wednesday, with the precious metal extending its gain by another 3% to trade just under $5,300 per ounce. Silver is also higher, gaining 5.4% to trade at $111 per ounce.

Powell posted a video message on January 11 announcing that the Fed received a grand jury subpoena. The Trump administration alleges that Powell committed perjury during a June appearance before Congress, where he discussed renovations to the central bank’s Washington, DC, buildings.

Business Insider obtained a letter Powell privately sent to senators detailing the Fed’s construction plans and budget — the details of which match his testimony. Powell said that the probe, which could result in a criminal indictment, is an escalation of ongoing pressure from the White House.

“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,” he said.

The Federal Open Market Committee has penciled in one rate cut for the new year. Fed leaders opted for three quarter-point cuts last fall after months of steady monetary policy.

The White House and investors are hopeful for a looser approach to interest rates in 2026. But Powell is in a tough spot: Lower rates could speed up a slow job market, but risk a rise in inflation.

CME FedWatch is predicting a near-total chance of a rate hold on Wednesday.