39 unchanged sentences
Critical Audit Matters
−Removed: The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
−Removed: The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
+Added: The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
+Added: The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Automotive Warranty Reserve
7 unchanged sentences
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
−Removed: These procedures included testing the effectiveness of controls relating to management’s estimate of the automotive warranty reserve for certain Tesla vehicle models, including controls over management’s significant assumptions related to the nature, frequency and costs of future claims as well as the completeness and accuracy of actual claims incurred to date.
+Added: These procedures included testing the effectiveness of controls relating to management’s estimate of the automotive warranty reserve for certain Tesla vehicle models, including controls over management’s significant assumptions related to the nature, frequency and costs of future claims and controls over the completeness and accuracy of actual claims incurred to date.
These procedures also included, among others, (i) testing the completeness and accuracy of historical vehicle claims processed and testing that such claims were appropriately used by management in the estimation of future claims and (ii) the involvement of professionals with specialized skill and knowledge to assist in evaluating the reasonableness of management’s estimate by (a) developing an independent estimate of the automotive warranty reserve for certain Tesla vehicle models and (b) comparing the independent estimate to management’s estimate.
−Removed: Developing the independent estimate involved evaluating the appropriateness of certain aspects of management’s significant assumptions related to the nature and frequency of future claims.
+Added: Developing the independent estimate involved evaluating the appropriateness of management’s significant assumptions related to the nature and frequency of future claims.
+Added: 2025 CEO Performance Award
+Added: As described in Notes 2 and 11 to the consolidated financial statements, the Company granted the 2025 CEO performance award with market, service and performance conditions and a required holding period.
+Added: The award consists of 12 tranches of performance-based restricted stock, each containing a market capitalization milestone and an operational milestone that must be met in order for the tranche to vest, in addition to the service condition.
+Added: With the assistance of a third-party valuation specialist, management determined the fair value of the award on the grant date, using a Monte Carlo valuation model, which included significant assumptions such as expected share price volatility, illiquidity discount and dilution adjustment.
+Added: To estimate the required holding period illiquidity discount applied to the fair value, management utilized significant assumptions relating to expected share price volatility and expected employee tax rate.
+Added: The Company recognizes stock-based compensation expense on a straight-line basis over the expected performance achievement period of individual performance milestones when the achievement of each individual performance milestones becomes probable.
+Added: As of December 31, 2025, the Company had unrecognized stock-based compensation expense of $10.23 billion for the operational milestone that was considered probable of achievement, which will be recognized over 9.7 years, and unrecognized stock-based compensation expense of $105.82 billion to $120.37 billion for the operational milestones that were considered not probable of achievement.
+Added: For the year ended December 31, 2025, the Company recorded stock-based compensation expense of $162 million related to the award.
+Added: The principal considerations for our determination that performing procedures relating to the 2025 CEO performance award is a critical audit matter are (i) the significant judgment by management when developing the fair value measurement of the award and determining whether performance conditions are probable;
+Added: (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to expected share price volatility, dilution adjustment, and estimated employee tax rate used in the fair value measurement of the award and evaluating audit evidence related to management's assessment of whether certain performance conditions were probable;
+Added: and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
+Added: Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
+Added: These procedures included testing the effectiveness of controls relating to management’s estimate of fair value of the 2025 CEO performance award, including controls over management’s significant assumptions related to the stock price volatility, dilution adjustment, and estimated employee tax rate, and controls over management’s assessment of the probability of certain performance conditions.
+Added: These procedures also included, among others, (i) testing the completeness and accuracy of the underlying data used in the Monte Carlo model, (ii) the involvement of professionals with specialized skill and knowledge to assist in evaluating the reasonableness of management’s estimate by (a) developing an independent estimate of the grant date fair value of the award, including evaluating the appropriateness of management’s significant assumptions related to expected share price volatility, dilution adjustment, and estimated employee tax rate, and (b) comparing the independent estimate to management’s estimate, (iii) testing management's process for determining the achievement of certain performance conditions, and (iv) evaluating the appropriateness of the probability of achievement of certain performance conditions by considering the current, past, and expected future performance of the Company, and whether management's assessment was consistent with evidence obtained in other areas of the audit.
/s/ PricewaterhouseCoopers LLP
13 unchanged sentences
Operating lease vehicles, net 4,912 5,581
−Removed: Solar energy systems, net 4,924 5,229
+Added: Energy generation and storage systems, net 4,604 4,924
Property, plant and equipment, net 40,643 35,836
Operating lease right-of-use assets 6,027 5,160
−Removed: Digital assets, net 1,076 184
−Removed: Intangible assets, net 150 178
−Removed: Goodwill 244 253
+Added: Digital assets 1,008 1,076
Deferred tax assets 6,925 6,524
21 unchanged sentences
6,000 shares authorized;
−Removed: 3,216 and 3,185 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively
+Added: 3,751 and 3,216 shares issued and outstanding as of December 31, 2025 and 2024, respectively
Additional paid-in capital 42,770 38,371
−Removed: Accumulated other comprehensive loss ( 670 ) ( 143 )
+Added: Accumulated other comprehensive income (loss) 361 ( 670 )
Retained earnings 39,003 35,209
30 unchanged sentences
Interest expense ( 338 ) ( 350 ) ( 156 )
−Removed: Other income (expense), net 695 172 ( 43 )
+Added: Other (expense) income, net ( 419 ) 695 172
Income before income taxes 5,278 8,990 9,973
17 unchanged sentences
Foreign currency translation adjustment 1,038 ( 539 ) 198
−Removed: Unrealized net gain (loss) on investments, net of tax 12 16 ( 23 )
+Added: Unrealized net (loss) gain on investments, net of tax ( 7 ) 12 16
Net loss realized and included in net income — — 4
+Added: Total other comprehensive income (loss):
+Added: 1,031 ( 527 ) 218
Comprehensive income 4,886 6,626 15,192
7 unchanged sentences
Comprehensive
−Removed: Income (Loss)
+Added: (Loss) Income
Stockholders’
2 unchanged sentences
Balance as of December 31, 2022 $ 409 3,164 $ 3 $ 32,177 $ ( 361 ) $ 12,885 $ 44,704 $ 785 $ 45,489
−Removed: Settlements of warrants — 37 — — — — — — —
Issuance of common stock for equity incentive awards — 21 — 700 — — 700 — 700
3 unchanged sentences
Net (loss) income ( 96 ) — — — — 14,997 14,997 73 15,070
−Removed: Other comprehensive loss — — — — ( 415 ) — ( 415 ) — ( 415 )
−Removed: Balance as of December 31, 2022 $ 409 3,164 $ 3 $ 32,177 $ ( 361 ) $ 12,885 $ 44,704 $ 785 $ 45,489
−Removed: Issuance of common stock for equity incentive awards — 21 — 700 — — 700 — 700
−Removed: Stock-based compensation — — — 2,013 — — 2,013 — 2,013
−Removed: Distributions to noncontrolling interests ( 32 ) — — — — — — ( 108 ) ( 108 )
−Removed: Buy-outs of noncontrolling interests ( 39 ) — — 2 — — 2 ( 17 ) ( 15 )
−Removed: Net (loss) income ( 96 ) — — — — 14,997 14,997 73 15,070
Other comprehensive income — — — — 218 — 218 — 218
9 unchanged sentences
Balance as of December 31, 2024 $ 63 3,216 $ 3 $ 38,371 $ ( 670 ) $ 35,209 $ 72,913 $ 704 $ 73,617
+Added: Issuance of common stock for equity incentive awards, net of issuance costs — 535 — 1,193 — — 1,193 — 1,193
+Added: Stock-based compensation — — — 3,096 — — 3,096 — 3,096
+Added: Distributions to noncontrolling interests ( 9 ) — — — — — — ( 91 ) ( 91 )
+Added: Shareholder settlement, net — — — 110 — — 110 — 110
+Added: Net income 4 — — — — 3,794 3,794 57 3,851
+Added: Other comprehensive income — — — — 1,031 — 1,031 — 1,031
+Added: Balance as of December 31, 2025 $ 58 3,751 $ 3 $ 42,770 $ 361 $ 39,003 $ 82,137 $ 670 $ 82,807
The accompanying notes are an integral part of these consolidated financial statements.
9 unchanged sentences
Inventory and purchase commitments write-downs 362 335 463
−Removed: Foreign currency transaction net unrealized (gain) loss ( 73 ) ( 144 ) 81
+Added: Foreign currency transaction net unrealized loss (gain) 452 ( 73 ) ( 144 )
Deferred income taxes 123 477 ( 6,349 )
Non-cash interest and other operating activities 272 172 81
−Removed: Digital assets (gain) loss, net ( 589 ) — 140
+Added: Digital assets loss (gain), net 68 ( 589 ) —
Changes in operating assets and liabilities:
9 unchanged sentences
Purchases of property and equipment excluding finance leases, net of sales ( 8,527 ) ( 11,342 ) ( 8,899 )
−Removed: Purchases of solar energy systems, net of sales ( 3 ) ( 1 ) ( 5 )
−Removed: Proceeds from sales of digital assets — — 936
−Removed: Purchase of intangible assets — — ( 9 )
Purchases of investments ( 37,109 ) ( 35,955 ) ( 19,112 )
1 unchanged sentence
Proceeds from sales of investments — 200 138
−Removed: Receipt of government grants — — 76
Business combinations, net of cash acquired — — ( 64 )
4 unchanged sentences
Repayments of debt ( 5,546 ) ( 2,500 ) ( 1,351 )
−Removed: Proceeds from exercises of stock options and other stock issuances 1,241 700 541
+Added: Proceeds from exercises of stock options and other stock issuances, net of issuance costs 1,186 1,241 700
Principal payments on finance leases ( 104 ) ( 381 ) ( 464 )
+Added: Proceeds received from directors in shareholder settlement 277 — —
+Added: Payment of legal fees associated with shareholder settlement ( 176 ) — —
Debt issuance costs ( 6 ) ( 14 ) ( 29 )
1 unchanged sentence
Payments for buy-outs of noncontrolling interests in subsidiaries — ( 133 ) ( 54 )
−Removed: Net cash provided by (used in) financing activities
+Added: Net cash provided by financing activities
1,139 3,853 2,589
Effect of exchange rate changes on cash and cash equivalents and restricted cash 171 ( 141 ) 4
−Removed: Net (decrease) increase in cash and cash equivalents and restricted cash
+Added: Net increase (decrease) in cash and cash equivalents and restricted cash
579 ( 152 ) 265
5 unchanged sentences
Cash paid during the period for interest $ 292 $ 277 $ 126
−Removed: Cash paid during the period for income taxes, net of refunds $ 1,331 $ 1,119 $ 1,203
The accompanying notes are an integral part of these consolidated financial statements.
2 unchanged sentences
(“Tesla”, the “Company”, “we”, “us” or “our”) was incorporated in the State of Delaware on July 1, 2003 and converted to a Texas corporation on June 13, 2024.
−Removed: We design, develop, manufacture, sell and lease high-performance fully electric vehicles and energy generation and storage systems, and offer services related to our products.
+Added: We are focused on bringing artificial intelligence (“AI”) into the real world, through products and services like Full Self-Driving (“FSD”) (Supervised) and Robotaxi, as well as working to develop and commercialize AI robots (“Bots”) (including Optimus).
+Added: We intend to leverage our current operations, in which we design, develop, manufacture, sell and lease high-performance fully electric vehicles and energy generation and storage systems that increasingly deliver AI-related and enhanced software and services to our customers, to achieve that objective.
Note 2 – Summary of Significant Accounting Policies
2 unchanged sentences
In accordance with the provisions of ASC 810, Consolidation (“ASC 810”), we consolidate any variable interest entity (“VIE”) of which we are the primary beneficiary.
−Removed: We have formed VIEs with financing fund investors in the ordinary course of business in order to facilitate the funding and monetization of certain attributes associated with solar energy systems and leases under our direct vehicle leasing programs.
+Added: We have formed VIEs with financing fund investors in the ordinary course of business in order to facilitate the funding and monetization of certain attributes associated with energy generation systems and leases under our direct vehicle leasing programs.
The typical condition for a controlling financial interest ownership is holding a majority of the voting interests of an entity;
7 unchanged sentences
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures in the accompanying notes.
−Removed: The estimates used for, but not limited to, determining significant economic incentive for resale value guarantee arrangements, sales return reserves, resale value guarantee liabilities, income taxes, the collectability of accounts and finance receivables, inventory valuation, warranties, fair value of long-lived assets, goodwill, fair value of financial instruments, fair value and residual value of operating lease vehicles and solar energy systems subject to leases could be impacted.
+Added: The estimates used for, but not limited to, determining significant economic incentive for resale value guarantee arrangements, sales return reserves, resale value guarantee liabilities, income taxes, the collectability of accounts and finance receivables, fair value and probability assessments of stock-based awards, inventory valuation, warranties, fair value of long-lived assets, fair value of financial instruments, fair value and residual value of operating lease vehicles and energy generation and storage systems subject to leases could be impacted.
We have assessed the impact and are not aware of any specific events or circumstances that required an update to our estimates and assumptions or materially affected the carrying value of our assets or liabilities as of the date of issuance of this Annual Report on Form 10-K.
18 unchanged sentences
Automotive Sales
−Removed: Automotive sales revenue includes revenues related to cash and financing deliveries of new vehicles, and specific other features and services that meet the definition of a performance obligation under ASC 606, including access to our FSD(Supervised) features and their ongoing maintenance, internet connectivity, free Supercharging programs and over-the-air software updates.
−Removed: We recognize revenue on automotive sales upon delivery to the customer, which is when the control of a vehicle transfers.
+Added: Automotive sales revenue includes revenues related to cash and financing deliveries of new vehicles, and specific other features and services that meet the definition of a performance obligation under ASC 606, Revenue from Contracts with Customers (“ASC 606”), including internet connectivity, access to our FSD (Supervised) features and their ongoing maintenance, free Supercharging programs and over-the-air software updates.
+Added: We recognize revenue on automotive sales, net of any discounts or financial subsidies, upon delivery to the customer, which is when the control of a vehicle transfers.
Payments are typically received at the point control transfers or in accordance with payment terms customary to the business, except sales we finance for which payments are collected over the contractual loan term.
We also recognize a sales return reserve based on historical experience plus consideration for expected future market values when we offer resale value guarantees or similar buyback terms.
−Removed: Other features and services such as access to our internet connectivity, unlimited free Supercharging and over-the-air software updates are provisioned upon control transfer of a vehicle and recognized over time on a straight-line basis as we have a stand-ready obligation to deliver such services to the customer.
+Added: Other features and services such as access to our internet connectivity, unlimited free Supercharging and over-the-air software updates are provisioned upon transfer of control of a vehicle and recognized over time on a straight-line basis as we have a stand-ready obligation to deliver such services to the customer.
Other limited free Supercharging incentives are recognized based on actual usage or expiration, whichever is earlier.
2 unchanged sentences
For our obligations related to automotive sales, we estimate standalone selling price by considering costs used to develop and deliver the service, third-party pricing of similar options and other information that may be available.
−Removed: Any fees that are paid or payable by us to a customer’s lender when we arrange the financing are recognized upfront as an offset against automotive sales revenue.
−Removed: Costs to obtain a contract mainly relate to commissions for the sale of vehicles.
+Added: Customers may purchase subscriptions, including FSD (Supervised) and premium connectivity, after taking delivery of their vehicles.
+Added: Revenue from subscriptions is recognized either over time or point in time depending on the nature of contractual terms.
+Added: Any fees or financial subsidies that are paid or payable by us to a customer’s lender when we arrange the financing are recognized upfront as an offset against automotive sales revenue.
As our contract costs related to automotive sales are typically fulfilled within one year, the costs to obtain a contract are expensed as incurred.
4 unchanged sentences
We receive upfront payment for the vehicle, do not bear casualty and credit risks during the lease term, and we provide a guarantee capped to a limit if they are unable to sell the vehicle at or above the vehicle’s contractual or determined residual value at the end of the lease term.
−Removed: We estimate a guarantee liability in accordance with ASC 460, Guarantees and record it within other liabilities on our consolidated balance sheet.
+Added: We estimate a guarantee liability in accordance with ASC 460, Guarantees and record it within other liabilities on our consolidated balance sheets.
On a quarterly basis, we assess the estimated market value of vehicles sold under these programs to determine whether there have been changes to the amount of expected resale value guarantee liabilities.
1 unchanged sentence
The total recorded guarantee liabilities on vehicles sold under these programs were immaterial as of December 31, 2025 and 2024.
−Removed: Our maximum exposure on the guarantees we provide if they are unable to sell the vehicle at or above the vehicle’s contractual residual value at the end of the lease term was $ 1.45 billion and $ 166 million as of December 31, 2024 and 2023, respectively.
−Removed: Deferred revenue related to the access to our FSD (Supervised) features and their ongoing maintenance, internet connectivity, free Supercharging programs and over-the-air software updates primarily on automotive sales consisted of the following (in millions):
+Added: Our maximum exposure on the guarantees we provide if they are unable to sell the vehicle at or above the vehicle’s contractual residual value at the end of the lease term was $ 3.45 billion and $ 1.45 billion as of December 31, 2025 and 2024, respectively.
+Added: Deferred revenue related to internet connectivity, access to our FSD (Supervised) features and their ongoing maintenance, free Supercharging programs and over-the-air software updates primarily on automotive sales consisted of the following (in millions):
Year Ended December 31,
5 unchanged sentences
Deferred revenue is equivalent to the total transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied, as of the balance sheet date.
−Removed: Revenue recognized from the deferred revenue balance as of December 31, 2023 and 2022 was $ 872 million and $ 469 million for the years ended December 31, 2024 and 2023, respectively.
+Added: Revenue recognized from the deferred revenue balances as of December 31, 2024 and 2023 was $ 815 million and $ 872 million for the years ended December 31, 2025 and 2024, respectively.
Of the total deferred revenue balance as of December 31, 2025, we expect to recognize $ 904 million of revenue in the next 12 months.
1 unchanged sentence
We have financing receivables on our consolidated balance sheets related to loans we provide for financing our automotive deliveries.
−Removed: As of December 31, 2024 and 2023, we had current net financing receivables of $ 247 million and $ 242 million, respectively, in Accounts receivable, net, and $ 821 million and $ 1.04 billion, respectively, in Other non-current assets for the long-term portion.
+Added: As of December 31, 2025 and 2024, we had current net financing receivables of $ 247 million and $ 247 million, respectively, in Accounts receivable, net, and $ 554 million and $ 821 million, respectively, in Other non-current assets for the long-term portion.
Automotive Regulatory Credits
−Removed: We earn tradable credits in the operation of our automotive business under various regulations related to ZEVs, greenhouse gas, fuel economy and clean fuel.
−Removed: We sell these credits to other regulated entities who can use the credits to comply with emission standards and other regulatory requirements.
+Added: We earn tradable credits in the operation of our automotive business under various regulations.
+Added: We sell these credits globally to other regulated entities who can use the credits to comply with emission standards and other regulatory requirements.
Payments for automotive regulatory credits are typically received at the point control transfers to the customer, or in accordance with payment terms customary to the business.
2 unchanged sentences
Revenue recognized from the deferred revenue balance as of December 31, 2024 and 2023 was immaterial for the years ended December 31, 2025 and 2024.
−Removed: During the year ended December 31, 2022, we had also recognized $ 288 million in revenue due to changes in regulation which entitled us to additional consideration for credits sold previously.
We have elected the practical expedient to omit disclosure of the amount of the transaction price allocated to remaining performance obligations for contracts with an original expected contract length of one year or less.
−Removed: As of December 31, 2024, total transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied for contracts with an original expected length of more than one year was $ 4.68 billion.
+Added: As of December 31, 2025, total transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied for contracts with an original expected length of more than one year was $ 841 million.
Of this amount, we expect to recognize $ 738 million in the next 12 months and the rest over the remaining performance obligation period.
−Removed: Additionally, changes in regulations on automotive regulatory credits may significantly impact our remaining performance obligations and revenue to be recognized under these contracts.
+Added: Changes in regulations on automotive regulatory credits may significantly impact our remaining performance obligations and revenue to be recognized under these contracts.
+Added: In 2025, governmental and regulatory actions, such as OBBBA, have restricted certain regulatory credit programs tied to our products, contributing to the $ 3.84 billion decrease in our remaining performance obligations as of December 31, 2025 compared to December 31, 2024.
Automotive Leasing Revenue
15 unchanged sentences
Services and Other Revenue
−Removed: Services and other revenue consists of sales of used vehicles, non-warranty maintenance services and collision, part sales, paid Supercharging, insurance services revenue and retail merchandise sales.
+Added: Services and other revenue consists of sales of used vehicles, non-warranty maintenance services and collision, paid Supercharging sessions, insurance services revenue, part sales and retail merchandise sales.
Revenues related to repair, maintenance and vehicle insurance services are recognized over time as services are provided and extended service plans are recognized over the performance period of the service contract as the obligation represents a stand-ready obligation to the customer.
6 unchanged sentences
Energy Generation and Storage Sales
−Removed: Energy generation and storage sales revenue consists of the sale of solar energy systems and energy storage systems to residential, small commercial, large commercial and utility grade customers.
−Removed: Sales of solar energy systems to residential and small-scale commercial customers consist of the engineering, design and installation of the system.
−Removed: Residential and small-scale commercial customers pay the full purchase price of the solar energy system upfront.
−Removed: Revenue for the design and installation obligation is recognized when control transfers, which is when we install a solar energy system and the system passes inspection by the utility or the authority having jurisdiction.
−Removed: Sales of energy storage systems to residential and small-scale commercial customers consist of the installation of the energy storage system and revenue is recognized when control transfers, which is when the product has been delivered or, if we are performing installation, when installed and commissioned.
+Added: Energy generation and storage sales revenue consists of the sale of energy generation and storage systems to residential, small commercial, large commercial and utility grade customers.
+Added: Sales of energy generation and storage systems to residential and small-scale commercial customers consist of the engineering, design and installation of the system.
+Added: Residential and small-scale commercial customers pay the full purchase price of the system upfront.
+Added: Revenue for the design and installation obligation is recognized when control transfers, which is when we install a system and the system passes inspection by the utility or the authority having jurisdiction.
+Added: We also sell storage systems to channel partners.
+Added: These sales are recognized when the product has been delivered.
Payment for such storage systems is made upon invoice or in accordance with payment terms customary to the business.
−Removed: For certain large commercial and utility grade energy storage system sales which consist of the engineering, design and installation of the system, customers make milestone payments that are consistent with contract-specific phases of a project.
−Removed: Revenue from such contracts is recognized over time using the percentage of completion method based on cost incurred as a percentage of total estimated contract costs for energy storage system sales.
+Added: For large commercial and utility grade energy storage system sales, customers make milestone payments that are consistent with contract-specific phases of a project.
+Added: Revenue from the sale of such systems is recognized when control transfers, which is when the product has been delivered.
+Added: For certain sales contracts which consist of the engineering, design and installation of the system, revenue related to those services is recognized over time based on their estimated standalone selling price and applying the percentage of completion method using cost incurred as a percentage of total estimated service costs.
In instances where there are multiple performance obligations in a single contract, we allocate the consideration to the various obligations in the contract based on the relative standalone selling price method.
9 unchanged sentences
As of December 31, 2025 and 2024, deferred revenue related to such customer payments amounted to $ 2.04 billion and $ 1.77 billion, respectively, mainly due to contractual payment terms.
−Removed: Revenue recognized from the deferred revenue balance as of December 31, 2023 and 2022 was $ 1.27 billion and $ 571 million for the years ended December 31, 2024 and 2023, respectively.
−Removed: We have elected the practical expedient to omit disclosure of the amount of the transaction price allocated to remaining performance obligations for energy generation and storage sales with an original expected contract length of one year or less and the amount that we have the right to invoice when that amount corresponds directly with the value of the performance to date.
+Added: Revenue recognized from the deferred revenue balance as of December 31, 2024 and 2023 was $ 1.45 billion and $ 1.27 billion for the years ended December 31, 2025 and 2024, respectively.
+Added: We have elected the practical expedient to omit disclosure of the amount of the transaction price allocated to remaining performance obligations for contracts with an original expected contract length of one year or less and the amount that we have the right to invoice when that amount corresponds directly with the value of the performance to date.
As of December 31, 2025, total transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied for contracts with an original expected length of more than one year was $ 10.42 billion.
Of this amount, we expect to recognize $ 4.96 billion in the next 12 months and the rest over the remaining performance obligation period.
+Added: Changes in government and economic incentives or tariffs may impact the transaction price or our ability to execute these existing contracts.
We have financing receivables on our consolidated balance sheets related to loans we provide for financing our energy products.
1 unchanged sentence
Energy Generation and Storage Leasing
−Removed: For revenue arrangements where we are the lessor under operating lease agreements for energy generation and storage products, we record lease revenue from minimum lease payments, including upfront rebates and incentives earned from such systems, on a straight-line basis over the life of the lease term, assuming all other revenue recognition criteria have been met.
−Removed: The difference between the payments received and the revenue recognized is recorded as deferred revenue or deferred asset on the consolidated balance sheet.
−Removed: For solar energy systems where customers purchase electricity from us under PPAs prior to January 1, 2019, we have determined that these agreements should be accounted for as operating leases pursuant to ASC 840, Leases .
+Added: For the arrangements where we are the lessor for energy generation and storage systems, we have determined that these agreements should be accounted for as operating leases.
+Added: We record lease revenue from minimum lease payments, assuming all other revenue recognition criteria have been met.
+Added: The difference between the payments received and the revenue recognized is recorded as deferred revenue or deferred asset on the consolidated balance sheets.
+Added: For energy generation and storage systems where customers purchase electricity from us under PPAs, we have determined that these agreements should be accounted for as operating leases.
Revenue is recognized based on the amount of electricity delivered at rates specified under the contracts, assuming all other revenue recognition criteria are met.
3 unchanged sentences
As of December 31, 2025 and 2024, deferred revenue from rebates and incentives was immaterial.
−Removed: We capitalize initial direct costs from the execution of agreements for solar energy systems and PPAs, which include the referral fees and sales commissions, as an element of solar energy systems, net, and subsequently amortize these costs over the term of the related agreements.
+Added: We capitalize initial direct costs from the execution of lease and PPA agreements for energy generation and storage systems, which include the referral fees and sales commissions, as an element of energy generation and storage systems, net, and subsequently amortize these costs over the term of the related agreements.
Cost of Revenues
1 unchanged sentence
Automotive Sales
−Removed: Cost of automotive sales revenue includes direct and indirect materials, labor costs, manufacturing overhead, including depreciation costs of tooling and machinery, shipping and logistic costs, vehicle connectivity costs, FSD (Supervised) ongoing maintenance costs, electricity costs for our free Supercharging programs and reserves for estimated warranty expenses.
+Added: Cost of automotive sales revenue includes direct and indirect materials, labor costs, manufacturing overhead, including depreciation costs of tooling and machinery, shipping and logistic costs, tariffs, vehicle connectivity costs, FSD (Supervised) ongoing maintenance costs, electricity costs for our free Supercharging programs and reserves for estimated warranty expenses.
Cost of automotive sales revenues also includes adjustments to warranty expense and charges to write down the carrying value of our inventory when it exceeds its estimated net realizable value and to provide for obsolete and on-hand inventory in excess of forecasted demand.
−Removed: Additionally, cost of automotive sales revenue benefits from manufacturing credits earned, amounting to $ 625 million and $ 359 million for the years ended December 31, 2024 and 2023, respectively.
+Added: Additionally, cost of automotive sales revenue benefits from manufacturing credits earned, amounting to $ 565 million, $ 625 million and $ 359 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Automotive Leasing
−Removed: Cost of automotive leasing revenue includes the depreciation of operating lease vehicles, cost of goods sold associated with direct sales-type leases and warranty expense related to leased vehicles.
+Added: Cost of automotive leasing revenue includes the depreciation of operating lease vehicles, cost of goods sold associated with direct sales-type leases and servicing of leased vehicles.
Services and Other
−Removed: Costs of services and other revenue includes cost of used vehicles including refurbishment costs, costs associated with providing non-warranty after-sales services, costs associated with our body shops and part sales, costs of paid Supercharging, costs to provide vehicle insurance and costs of retail merchandise sales.
+Added: Costs of services and other revenue includes cost of used vehicles including refurbishment costs, labor and material costs associated with providing non-warranty maintenance services and collision, operating costs of paid Supercharging sessions, claim costs associated with providing automotive insurance, and costs associated with our part sales and retail merchandise sales.
Energy Generation and Storage Segment
Energy Generation and Storage
−Removed: Cost of energy generation and storage revenue includes direct and indirect material and labor costs, manufacturing overhead, including depreciation costs of tooling and machinery, freight, warranty expense, and cost of servicing.
+Added: Cost of energy generation and storage revenue includes direct and indirect material, tariffs, labor costs, manufacturing overhead, including depreciation costs of tooling and machinery, shipping and logistic costs, warranty expense, and cost of servicing.
Cost of energy generation and storage revenue also includes charges to write down the carrying value of our inventory when it exceeds its estimated net realizable value and to provide for obsolete and on-hand inventory in excess of forecasted demand.
−Removed: Additionally, cost of energy generation and storage revenue benefits from manufacturing credits earned, amounting to $ 756 million and $ 115 million for the years ended December 31, 2024 and 2023, respectively.
−Removed: In agreements for solar energy systems and PPAs where we are the lessor, the cost of revenue is primarily comprised of depreciation of the cost of leased solar energy systems, maintenance costs associated with those systems and amortization of any initial direct costs.
+Added: Additionally, cost of energy generation and storage revenue benefits from manufacturing credits earned, amounting to $ 1.12 billion, $ 756 million and $ 115 million for the years ended December 31, 2025, 2024 and 2023, respectively.
+Added: In lease agreements and PPAs for energy generation and storage systems where we are the lessor, the cost of revenue is primarily comprised of depreciation of the cost of leased energy generation and storage systems, maintenance costs associated with those systems and amortization of any initial direct costs.
Research and Development Costs
13 unchanged sentences
shareholder to tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries.
−Removed: Under GAAP, we can make an accounting policy election to either treat taxes due on the GILTI inclusion as a current period expense or factor such amounts into our measurement of deferred taxes.
+Added: The OBBBA renamed GILTI to NCTI for taxable years beginning after December 31, 2025.
+Added: Under GAAP, we can make an accounting policy election to either treat taxes due on the GILTI or NCTI inclusion as a current period expense or factor such amounts into our measurement of deferred taxes.
We elected the deferred method, under which we recorded the corresponding deferred tax assets and liabilities in our consolidated balance sheets.
3 unchanged sentences
Stock-Based Compensation
−Removed: We use the fair value method of accounting for our stock options and RSUs granted to employees and for our ESPP to measure the cost of employee services received in exchange for the stock-based awards.
−Removed: The fair value of stock option awards with only service and/or performance conditions is estimated on the grant or offering date using the Black-Scholes option-pricing model.
−Removed: The Black-Scholes option-pricing model requires inputs such as the risk-free interest rate, expected term and expected volatility.
−Removed: These inputs are subjective and generally require significant judgment.
−Removed: The fair value of RSUs is measured on the grant date based on the closing fair market value of our common stock.
−Removed: The resulting cost is recognized over the period during which an employee is required to provide service in exchange for the awards, usually the vesting period, which is generally four years for stock options and RSUs and six months for the ESPP.
−Removed: Stock-based compensation expense is recognized on a straight-line basis, net of actual forfeitures in the period.
−Removed: For performance-based awards, stock-based compensation expense is recognized over the expected performance achievement period of individual performance milestones when the achievement of each individual performance milestone becomes probable.
−Removed: As we accumulate additional employee stock-based awards data over time and as we incorporate market data related to our common stock, we may calculate significantly different volatilities and expected lives, which could materially impact the valuation of our stock-based awards and the stock-based compensation expense that we will recognize in future periods.
−Removed: Stock-based compensation expense is recorded in Cost of revenues, Research and development expense and Selling, general and administrative expense in the consolidated statements of operations.
+Added: We use the fair value method of accounting for our restricted stock, stock options and RSUs granted to employees and for our ESPP to measure the cost of employee services received in exchange for the stock-based awards.
+Added: Stock-based compensation expense for equity awards is a non-cash expense and is recorded in Cost of revenues, Research and development expense and Selling, general and administrative expense in the consolidated statements of operations based on the function of the employee.
+Added: Equity awards with service and/or performance conditions
+Added: The fair value of stock option awards with service and/or performance conditions and the ESPP is estimated on the grant or offering date using the Black-Scholes option-pricing model.
+Added: The Black-Scholes option-pricing model requires inputs such as the risk-free interest rate, expected award term and expected share price volatility.
+Added: The fair value of RSUs with service and/or performance conditions is measured on the grant date based on the closing fair market value of our common stock.
+Added: The resulting stock-based compensation expense for stock options, RSUs and the ESPP is recognized over the period during which an employee is required to provide service in exchange for the awards, usually the vesting period, which is generally four years for stock options and RSUs and six months for the ESPP.
+Added: The fair value of restricted stock granted to our CEO with service and/or performance conditions is measured on the grant date based on the closing fair market value of our common stock, adjusted to take into account the illiquidity discount due to any applicable required holding requirement that is in effect post-vesting, less any purchase price or offset amount.
+Added: The illiquidity discount is determined using a valuation model that requires inputs such as expected share price volatility and the employee’s expected tax rate.
+Added: The inputs used in the valuation models, which are subjective and generally require significant judgment, are unique to each award based on the best available information at the valuation date.
+Added: Stock-based compensation expense for equity awards with performance conditions is recognized over the requisite service period when the vesting of the award becomes probable.
+Added: Stock-based compensation expense is recognized on a straight-line basis for equity awards with only a service condition and on a graded vesting basis for equity awards with a performance condition, net of actual forfeitures in the period.
+Added: Equity awards with market, service and performance conditions
+Added: The fair value and derived service period of performance-based awards granted to our CEO with market, service and performance conditions are estimated on the grant date using a Monte Carlo simulation model.
+Added: A Monte Carlo simulation model requires inputs such as the risk-free interest rate, expected award term, expected share dilution and expected share price volatility.
+Added: For awards with a holding requirement that is in effect post-vesting, the fair value is adjusted to take into account an illiquidity discount, which is determined using a valuation model that requires inputs such as expected share price volatility and the employee’s expected tax rate.
+Added: These inputs, which are subjective and generally require significant judgment, are unique to each award based on the best available information at the valuation date.
+Added: For such awards, stock-based compensation expense is recognized on a straight-line basis over the expected performance achievement period of individual performance milestones when the achievement of each individual performance milestone becomes probable.
+Added: As applicable, stock-based compensation expense for such awards is recognized over the longer of (i) the expected service period, (ii) the expected achievement period for the operational milestone (performance condition) and (iii) the expected achievement period for the related market capitalization milestone determined on the grant date, with recognition beginning at the point in time that the relevant operational milestone is considered probable of achievement.
+Added: If such operational milestone becomes probable any time after the grant date or the expected achievement period changes, we will recognize a cumulative expense adjustment from the grant date to that point in time.
+Added: Stock-based compensation expense will continue to be recognized over the expected achievement period for the operational milestone (if applicable) regardless of whether the market capitalization milestone is achieved earlier than its expected achievement period or achieved at all, as long as the service condition continues to be satisfied.
+Added: If an operational milestone is subsequently determined to be improbable of achievement, stock-based compensation expense previously recognized would be reversed in the period the condition is deemed improbable.
Noncontrolling Interests and Redeemable Noncontrolling Interests
−Removed: Noncontrolling interests and redeemable noncontrolling interests represent third-party interests in the net assets under certain funding arrangements, or funds, that we have entered into to finance the costs of solar energy systems and vehicles under operating leases.
+Added: Noncontrolling interests and redeemable noncontrolling interests represent third-party interests in the net assets under certain funding arrangements, or funds, that we have entered into to finance the costs of energy generation systems.
We have determined that the contractual provisions of the funds represent substantive profit-sharing arrangements.
We have further determined that the methodology for calculating the noncontrolling interest and redeemable noncontrolling interest balances that reflects the substantive profit-sharing arrangements is a balance sheet approach using the hypothetical liquidation at book value (“HLBV”) method.
−Removed: We, therefore, determine the amount of the noncontrolling interests and redeemable noncontrolling interests in the net assets of the funds at each balance sheet date using the HLBV method, which is presented on the consolidated balance sheet as noncontrolling interests in subsidiaries and redeemable noncontrolling interests in subsidiaries.
−Removed: Under the HLBV method, the amounts reported as noncontrolling interests and redeemable noncontrolling interests in the consolidated balance sheet represent the amounts the third parties would hypothetically receive at each balance sheet date under the liquidation provisions of the funds, assuming the net assets of the funds were liquidated at their recorded amounts determined in accordance with GAAP and with tax laws effective at the balance sheet date and distributed to the third parties.
+Added: We, therefore, determine the amount of the noncontrolling interests and redeemable noncontrolling interests in the net assets of the funds at each balance sheet date using the HLBV method, which is presented on the consolidated balance sheets as noncontrolling interests in subsidiaries and redeemable noncontrolling interests in subsidiaries.
+Added: Under the HLBV method, the amounts reported as noncontrolling interests and redeemable noncontrolling interests in the consolidated balance sheets represent the amounts the third parties would hypothetically receive at each balance sheet date under the liquidation provisions of the funds, assuming the net assets of the funds were liquidated at their recorded amounts determined in accordance with GAAP and with tax laws effective at the balance sheet date and distributed to the third parties.
The third parties’ interests in the results of operations of the funds are determined as the difference in the noncontrolling interest and redeemable noncontrolling interest balances in the consolidated balance sheets between the start and end of each reporting period, after taking into account any capital transactions between the funds and the third parties.
However, the redeemable noncontrolling interest balance is at least equal to the redemption amount.
−Removed: The redeemable noncontrolling interest balance is presented as temporary equity in the mezzanine section of the consolidated balance sheet since these third parties have the right to redeem their interests in the funds for cash or other assets.
+Added: The redeemable noncontrolling interest balance is presented as temporary equity in the mezzanine section of the consolidated balance sheets since these third parties have the right to redeem their interests in the funds for cash or other assets.
Net Income per Share of Common Stock Attributable to Common Stockholders
1 unchanged sentence
Potentially dilutive shares, which are based on the weighted-average shares of common stock underlying outstanding stock-based awards, warrants and convertible senior notes using the treasury stock method or the if-converted method, as applicable, are included when calculating diluted net income per share of common stock attributable to common stockholders when their effect is dilutive.
+Added: Equity awards classified as RSAs are treated as issued shares when granted and approved;
+Added: however, these shares are not included in the computation of basic weighted average shares outstanding until vested.
The following table presents the reconciliation of net income attributable to common stockholders to net income used in computing basic and diluted net income per share of common stock (in millions):
3 unchanged sentences
Buy-outs of noncontrolling interests — ( 39 ) ( 2 )
−Removed: Net income used in computing basic net income per share of common stock 7,130 14,999 12,583
−Removed: Dilutive convertible debt — — ( 1 )
−Removed: Net income used in computing diluted net income per share of common stock $ 7,130 $ 14,999 $ 12,584
+Added: Net income used in computing basic and diluted net income per share of common stock $ 3,794 $ 7,130 $ 14,999
+Added: RSAs will be excluded from the computation of diluted weighted average shares until the shares have been deemed to be earned.
The following table presents the reconciliation of basic to diluted weighted average shares used in computing net income per share of common stock attributable to common stockholders (in millions):
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We maintain certain cash balances restricted as to withdrawal or use.
−Removed: Our restricted cash is comprised primarily of cash held to service certain payments under various secured debt facilities, cash held as collateral for sales to lease partners with a resale value guarantee and deposits held for our insurance services.
−Removed: We record restricted cash as other assets in the consolidated balance sheets and determine current or non-current classification based on the expected duration of the restriction.
+Added: Our restricted cash is comprised primarily of cash held as collateral for sales to lease partners with a resale value guarantee, cash held to service certain payments under various secured debt facilities, and deposits held for our insurance services.
+Added: We record restricted cash as other assets in the consolidated balance sheets and determine current or non-current classification based on the expected remaining duration of the restriction.
Our total cash and cash equivalents and restricted cash, as presented in the consolidated statements of cash flows, was as follows (in millions):
5 unchanged sentences
Total as presented in the consolidated statements of cash flows $ 17,616 $ 17,037 $ 17,189
−Removed: Our investments are all designated as available-for-sale and reported at estimated fair value, with unrealized gains and losses recorded in accumulated other comprehensive loss which is included within stockholders’ equity.
+Added: Our investments are all designated as available-for-sale and reported at estimated fair value, with unrealized gains and losses recorded in accumulated other comprehensive income (loss) which is included within stockholders’ equity.
Available-for-sale marketable securities with maturities greater than three months at the date of purchase are included in short-term investments in our consolidated balance sheets.
Interest, dividends, amortization and accretion of purchase premiums and discounts on these investments are included within Interest income in our consolidated statements of operations.
−Removed: Interest income on our short-term investments for the years ended December 31, 2024, 2023 and 2022 was $ 763 million, $ 388 million and an immaterial amount, respectively.
+Added: Interest income on our short-term investments for the years ended December 31, 2025, 2024 and 2023 was $ 879 million, $ 763 million and $ 388 million, respectively.
The cost of available-for-sale investments sold is based on the specific identification method.
−Removed: Realized gains and losses on the sale of available-for-sale investments are recorded in Other income (expense), net.
+Added: Realized gains and losses on the sale of available-for-sale investments are recorded in Other (expense) income, net.
We regularly review all of our investments for declines in fair value.
2 unchanged sentences
Accounts Receivable and Allowance for Doubtful Accounts
−Removed: Accounts receivable primarily include amounts related to receivables from financial institutions and leasing companies offering various financing products to our customers, sales of energy generation and storage products, sales of regulatory credits to other automotive manufacturers and government rebates already passed through to customers.
+Added: Accounts receivable primarily include amounts related to receivables from sales of energy generation and storage products, financial institutions and leasing companies offering various financing products to our customers, sales of regulatory credits to other automotive manufacturers, and government rebates already passed through to customers.
We provide an allowance against accounts receivable for the amount we expect to be uncollectible.
2 unchanged sentences
Our accounts receivable balances associated with sales of energy storage products are dependent on billing milestones and payment terms negotiated for each contract, and our accounts receivable balances associated with our sales of regulatory credits are dependent on contractual payment terms.
−Removed: Additionally, government rebates can take up to a year or more to be collected depending on the customary processing timelines of the specific jurisdictions issuing them.
These various factors may have a significant impact on our accounts receivable balance from period to period.
−Removed: As of December 31, 2024 and 2023, government rebates receivable was $ 315 million and $ 378 million, respectively, in Accounts receivable, net for the current portion and an immaterial amount and $ 207 million, respectively, in Other non-current assets for the long-term portion in our consolidated balance sheets.
+Added: As of December 31, 2025 and 2024, government rebates receivable was $ 108 million and $ 315 million, respectively, in Accounts receivable, net.
Financing Receivables
10 unchanged sentences
As of December 31, 2025 and 2024, the vast majority of our financing receivables were at current status with an immaterial balance being past due.
−Removed: As of December 31, 2024 and 2023, the majority of our financing receivables, excluding MyPower notes receivable, were originated in 2023 and 2022.
−Removed: We have customer notes receivable under the legacy MyPower loan program, which provided residential customers with the option to finance the purchase of a solar energy system through a 30-year loan and were all originated prior to year 2018.
+Added: As of December 31, 2025, the majority of our financing receivables, excluding MyPower notes receivable, were originated in the past four years.
+Added: As of December 31, 2024, the majority of these receivables were originated in 2023 and 2022.
+Added: We have customer notes receivable under the legacy MyPower loan program, which provided residential customers with the option to finance the purchase of an energy generation system through a 30-year loan and were all originated prior to year 2018.
The outstanding balances, net of any allowance for expected credit losses, are presented on the consolidated balance sheets as a component of Prepaid expenses and other current assets for the current portion and as Other non-current assets for the long-term portion.
−Removed: As of December 31, 2024 and 2023, the total outstanding balance of MyPower customer notes receivable, net of allowance for expected credit losses, was $ 248 million and $ 266 million, respectively, of which $ 4 million and $ 5 million were due in the next 12 months as of December 31, 2024 and 2023, respectively.
+Added: As of December 31, 2025 and 2024, the total outstanding balance of MyPower customer notes receivable, net of allowance for expected credit losses, was $ 241 million and $ 248 million, respectively, of which immaterial amounts were due in the next 12 months as of December 31, 2025 and 2024.
As of December 31, 2025 and 2024, the allowance for expected credit losses was $ 26 million and $ 33 million, respectively.
11 unchanged sentences
We also review our inventory to determine whether its carrying value exceeds the net amount realizable upon the ultimate sale of the inventory.
−Removed: This requires us to determine the estimated selling price of our vehicles less the estimated cost to convert the inventory on-hand into a finished product.
+Added: This requires us to determine the estimated selling price of our products less the estimated cost to convert the inventory on-hand into a finished product.
Once inventory is written-down, a new, lower cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.
6 unchanged sentences
Operating lease vehicles on the consolidated balance sheets are presented net of accumulated depreciation of $ 1.21 billion and $ 1.45 billion as of December 31, 2025 and 2024, respectively.
−Removed: Digital Assets, Net
+Added: Digital Assets
We account for all digital assets held as crypto assets, a subset of indefinite-lived intangible assets in accordance with ASC 350-60, Intangibles - Goodwill and Other - Crypto Assets .
We have ownership of and control over our digital assets and we may use third-party custodial services to secure it.
−Removed: The digital assets are initially recorded at cost and are subsequently remeasured on the consolidated balance sheet at fair value.
−Removed: Periods prior to January 1, 2024 include digital assets at cost, net of impairment losses incurred since their acquisition.
+Added: The digital assets are initially recorded at cost and are subsequently remeasured on the consolidated balance sheets at fair value.
We determine and record the fair value of our digital assets in accordance with ASC 820, Fair Value Measurement (“ASC 820”), based on quoted prices on the active exchange(s) that we have determined is the principal market for such assets (Level I inputs).
We determine the cost basis of our digital assets using the specific identification of each unit received.
−Removed: Realized and unrealized gains and losses are now recorded to Other income (expense), net in our consolidated statement of operations.
−Removed: For periods prior to January 1, 2024, impairment losses were recognized within Restructuring and other in the consolidated statements of operations in the period in which the impairment was identified.
−Removed: Also for periods prior to January 1, 2024, gains were not recorded until realized upon sale(s), at which point they were presented net of any impairment losses for the same digital assets held within Restructuring and other.
−Removed: In determining the gain to be recognized upon sale, we calculate the difference between the sales price and carrying value of the digital assets sold immediately prior to sale.
−Removed: See Note 3, Digital Assets, Net , for further information regarding digital assets.
−Removed: Solar Energy Systems, Net
−Removed: We are the lessor of solar energy systems, which are stated at cost less accumulated depreciation.
−Removed: Depreciation of solar energy systems is calculated using the straight-line method over the estimated useful lives of 30 to 35 years.
−Removed: The gross cost of solar energy systems as of December 31, 2024 and 2023 was $ 6.79 billion and $ 6.87 billion, respectively.
−Removed: Solar energy systems on the consolidated balance sheets are presented net of accumulated depreciation of $ 1.86 billion and $ 1.64 billion as of December 31, 2024 and 2023, respectively.
+Added: Realized and unrealized gains and losses are recorded to Other (expense) income, net in our consolidated statement of operations.
+Added: See Note 3, Digital Assets , for further information regarding digital assets.
+Added: Energy generation and storage systems, net
+Added: We are the lessor of energy generation and storage systems, which are stated at cost less accumulated depreciation.
+Added: Depreciation of energy generation and storage systems is calculated using the straight-line method over the estimated useful lives of 15 to 35 years.
+Added: The gross cost of energy generation and storage systems as of December 31, 2025 and 2024 was $ 6.66 billion and $ 6.79 billion, respectively.
+Added: Energy generation and storage systems on the consolidated balance sheets are presented net of accumulated depreciation of $ 2.06 billion and $ 1.86 billion as of December 31, 2025 and 2024, respectively.
Property, Plant and Equipment, Net
8 unchanged sentences
AI infrastructure includes our owned data centers.
−Removed: Upon the retirement or sale of our property, plant and equipment, the cost and associated accumulated depreciation are removed from the consolidated balance sheet, and the resulting gain or loss is reflected on the consolidated statement of operations.
+Added: Upon the retirement or sale of our property, plant and equipment, the cost and associated accumulated depreciation are removed from the consolidated balance sheets, and the resulting gain or loss is reflected on the consolidated statement of operations.
Maintenance and repair expenditures are expensed as incurred while major improvements that increase the functionality, output or expected life of an asset are capitalized and depreciated ratably over the identified useful life.
Long-Lived Assets Including Acquired Intangible Assets
−Removed: We review our property, plant and equipment, solar energy systems, long-term prepayments and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable.
+Added: We review our property, plant and equipment, energy generation and storage systems, long-term prepayments and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable.
We measure recoverability by comparing the carrying amount to the future undiscounted cash flows that the asset is expected to generate.
1 unchanged sentence
For the years ended December 31, 2025, 2024 and 2023, we have recognized no material impairments of our long-lived assets.
−Removed: Intangible assets with definite lives are amortized on a straight-line basis over their estimated useful lives, which range from seven to thirty years .
+Added: Intangible assets with definite lives are amortized on a straight-line basis over their estimated useful lives, which range from three to thirty years .
+Added: The net carrying value of our intangible assets decreased from $ 150 million as of December 31, 2024 to $ 124 million as of December 31, 2025 mainly from amortization.
+Added: Intangible assets are included in Other non-current assets on the consolidated balance sheets.
+Added: Goodwill increased $ 13 million within the automotive segment from $ 244 million as of December 31, 2024 to $ 257 million as of December 31, 2025.
+Added: Goodwill is included in Other non-current assets on the consolidated balance sheets.
We assess goodwill for impairment annually in the fourth quarter, or more frequently if events or changes in circumstances indicate that it might be impaired, by comparing its carrying value to the reporting unit’s fair value.
For the years ended December 31, 2025, 2024, and 2023, we did no t recognize any impairment of goodwill.
+Added: There were no accumulated impairment losses as of December 31, 2025 and 2024.
Capitalization of Software Costs
12 unchanged sentences
Foreign currency transaction gains and losses are a result of the effect of exchange rate changes on transactions denominated in currencies other than the functional currency of the respective subsidiary.
−Removed: Transaction gains and losses are recognized in Other income (expense), net, in the consolidated statements of operations.
−Removed: For the years ended December 31, 2024, 2023 and 2022, we recorded a net foreign currency transaction gain of $ 57 million, gain of $ 122 million and loss of $ 89 million, respectively.
+Added: Transaction gains and losses are recognized in Other (expense) income, net, in the consolidated statements of operations.
+Added: For the years ended December 31, 2025, 2024 and 2023, we recorded a net foreign currency transaction loss of $ 407 million, gain of $ 57 million and gain of $ 122 million, respectively.
We provide a manufacturer’s warranty on all new and used vehicles and a warranty on the installation and components of the energy generation and storage systems we sell for periods typically between 1 to 25 years.
2 unchanged sentences
These estimates are inherently uncertain and changes to our historical or projected warranty experience may cause material changes to the warranty reserve in the future.
−Removed: The warranty reserve does not include projected warranty costs associated with our vehicles subject to operating lease accounting and our solar energy systems under lease contracts or PPAs, as the costs to repair these warranty claims are expensed as incurred.
+Added: The warranty reserve does not include projected service costs associated with our vehicles subject to operating lease accounting and our energy generation and storage systems under lease contracts or PPAs, as these service costs are expensed as incurred.
The portion of the warranty reserve expected to be incurred within the next 12 months is included within Accrued liabilities and other, while the remaining balance is included within Other long-term liabilities on the consolidated balance sheets.
18 unchanged sentences
The benefit is generally recorded when all conditions attached to the incentive have been met or are expected to be met and there is reasonable assurance of their receipt.
−Removed: The IRA Incentives
+Added: The IRA Incentives Modified by the OBBBA
On August 16, 2022, the IRA was enacted into law and is effective for taxable years beginning after December 31, 2022.
−Removed: The IRA includes multiple incentives to promote clean energy, electric vehicles, battery and energy storage manufacture or purchase, in addition to a new corporate alternative minimum tax of 15% on adjusted financial statement income of corporations with profits greater than $1 billion.
+Added: The IRA includes multiple incentives to promote clean energy, electric vehicles, battery and energy storage manufacture or purchase.
+Added: The IRA incentives were subsequently modified by the OBBBA enacted on July 4, 2025, which imposes more stringent eligibility requirements, accelerated phase-outs, and the termination of certain provisions.
Some of these measures are expected to materially affect our consolidated financial statements.
−Removed: For the years ended December 31, 2024 and 2023, the impact from our IRA incentive was primarily a reduction of our costs of revenue in our consolidated statements of operations.
−Removed: Gigafactory New York—New York State Investment and Lease
−Removed: We have a lease through the Research Foundation for the SUNY Foundation with respect to Gigafactory New York.
−Removed: Under the lease and a related research and development agreement, we are continuing to designate further buildouts at the facility.
−Removed: We are required to comply with certain covenants, including hiring and cumulative investment targets.
−Removed: Under the terms of the arrangement, the SUNY Foundation paid for a majority of the construction costs related to the manufacturing facility and the acquisition and commissioning of certain manufacturing equipment;
−Removed: and we are responsible for any construction or equipment costs in excess of such amount (refer to Note 14, Commitments and Contingencies ).
−Removed: This incentive reduces the related lease costs of the facility within the Energy generation and storage cost of revenues and operating expense line items in our consolidated statements of operations and was not material for any period presented.
−Removed: Gigafactory Shanghai—Land Use Rights and Economic Benefits
−Removed: We have an agreement with the local government of Shanghai for land use rights at Gigafactory Shanghai.
−Removed: Under the terms of the arrangement, we are required to meet a cumulative capital expenditure target and an annual tax revenue target starting at the end of 2023.
−Removed: In addition, the Shanghai government has granted to our Gigafactory Shanghai subsidiary certain incentives to be used in connection with eligible capital investments at Gigafactory Shanghai (refer to Note 14, Commitments and Contingencies ).
−Removed: Incentives that offset costs of our facilities are recorded as a reduction of the cost of the capital investment within the Property, plant and equipment, net line item in our consolidated balance sheets and incentives related to our manufacturing operations are recorded as an offset to cost of revenues in our consolidated statements of operations.
−Removed: For the years ended December 31, 2024 and 2023, the amounts received were immaterial.
+Added: For the years ended December 31, 2025, 2024 and 2023, the impact from our IRA incentive was primarily a reduction of our costs of revenue in our consolidated statements of operations as discussed above in Cost of Revenues.
Nevada Tax Incentives
12 unchanged sentences
Recently issued accounting pronouncements not yet adopted
−Removed: In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.
−Removed: 2023-09, Improvements to Income Tax Disclosures (Topic 740).
−Removed: The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid.
−Removed: The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024.
−Removed: Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance.
−Removed: This ASU will likely result in the required additional disclosures being included in our consolidated financial statements, once adopted.
In November 2024, the FASB issued ASU No.
7 unchanged sentences
We are currently evaluating the provisions of this ASU.
+Added: In July 2025, the FASB issued ASU No.
+Added: 2025-05, Financial Instruments—Credit Losses (Topic 326):
+Added: Measurement of Credit Losses for Accounts Receivable and Contract Assets.
+Added: The amendments in this update provide a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current classified accounts receivable and contract assets.
+Added: This update is effective for annual periods beginning after December 15, 2025, including interim periods within those fiscal years.
+Added: Adoption of this ASU can be applied prospectively for reporting periods after its effective date.
+Added: Early adoption is permitted.
+Added: We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
+Added: In September 2025, the FASB issued ASU No.
+Added: 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):
+Added: Targeted Improvements to the Accounting for Internal-Use Software.
+Added: The ASU simplifies the capitalization guidance by removing all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout ASC 350-40.
+Added: The ASU is effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years.
+Added: Adoption of this ASU can be applied prospectively for reporting periods after its effective date;
+Added: or follow a modified transition approach that is based on the status of the respective projects and whether software costs were capitalized before the date of adoption;
+Added: or retrospectively to any or all prior periods presented in the consolidated financial statements.
+Added: Early adoption is permitted.
+Added: We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
+Added: In December 2025, the FASB issued ASU No.
+Added: 2025-10, Government Grants (Topic 832):
+Added: Accounting for Government Grants Received by Business Entities.
+Added: The ASU establishes authoritative guidance in GAAP about accounting for government grants received by business entities, clarifies the appropriate accounting, in an effort to reduce diversity in practice, and increase consistency of application across business entities.
+Added: The ASU is effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods.
+Added: Adoption of this ASU can be applied a modified prospective approach, a modified retrospective approach, or a retrospective approach.
+Added: Early adoption is permitted.
+Added: We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
+Added: In December 2025, the FASB issued ASU No.
+Added: 2025-11, Interim Reporting (Topic 270):
+Added: Narrow-Scope Improvements.
+Added: The ASU clarifies interim disclosure requirements and the applicability of Topic 270.
+Added: The objective of the amendments is to provide further clarity about the current interim disclosure requirements.
+Added: The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027.
+Added: Adoption of this ASU can be applied either a prospective or a retrospective approach.
+Added: Early adoption is permitted.
+Added: We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
+Added: In December 2025, the FASB issued ASU No.
+Added: 2025-12, Codification Improvements.
+Added: The ASU addresses thirty-three items, representing the changes to the Codification that (1) clarify, (2) correct errors, or (3) make minor improvements.
+Added: Generally, the amendments in this Update are not intended to result in significant changes for most entities.
+Added: The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2026.
+Added: The adoption method of this ASU may vary, on an issue-by-issue basis.
+Added: Early adoption is permitted.
+Added: We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
Recently adopted accounting pronouncements
−Removed: In November 2023, the FASB issued ASU No.
−Removed: 2023-07, Improvements to Reportable Segment Disclosures (Topic 280).
−Removed: This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss.
−Removed: This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources.
−Removed: The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.
−Removed: We adopted this ASU retrospectively on December 31, 2024.
−Removed: Refer to Note 17, Segment Reporting and Information about Geographic Areas for the inclusion of the new required disclosures.
In December 2023, the FASB issued ASU No.
2 unchanged sentences
The new crypto assets standard also enhances the other intangible asset disclosure requirements by requiring the name, cost basis, fair value, and number of units for each significant crypto asset holding.
−Removed: The new crypto assets standard is effective for annual periods beginning after December 15, 2024, including interim periods within those fiscal years.
−Removed: Adoption of the new crypto assets standard requires a cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the annual reporting period in which an entity adopts the amendments.
−Removed: Early adoption is also permitted, including adoption in an interim period.
−Removed: However, if the new crypto assets standard is early adopted in an interim period, an entity must adopt the new crypto assets standard as of the beginning of the fiscal year that includes the interim period.
We adopted the new crypto assets standard on a modified retrospective approach effective January 1, 2024.
−Removed: Refer to Note 3, Digital Assets, Net for the inclusion of the new required disclosures.
The cumulative effect of the changes made on our January 1, 2024 consolidated balance sheet for the adoption of the new crypto assets standard was as follows (in millions):
5 unchanged sentences
Retained earnings 27,882 236 28,118
−Removed: Note 3 – Digital Assets, Net
+Added: In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.
+Added: 2023-09, Improvements to Income Tax Disclosures (Topic 740).
+Added: The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid.
+Added: We adopted this ASU on a prospective basis effective January 1, 2025.
+Added: Refer to Note 12, Income Taxes for the inclusion of new disclosures required.
+Added: On July 4, 2025, the U.S.
+Added: H.R.1, an act to provide for reconciliation pursuant to title II of H.
+Added: (the “OBBBA”) was enacted.
+Added: The OBBBA introduces multiple tax law and other legislative changes, including modifications to income tax provisions such as domestic research and development expenses, capital expenditures, and U.S.
+Added: taxation of international earnings;
+Added: the repeal or acceleration of the sunset of certain tax credits under the 2022 Inflation Reduction Act and elimination of certain penalties for violations of certain regulatory credit programs.
+Added: We have recognized the effects of the OBBBA provisions in our financial results to the extent they are applicable to the year ended December 31, 2025.
+Added: We will continue to evaluate the impact of these provisions on our 2026 and subsequent consolidated financial statements, including loss of certain regulatory credit sales tied to our products and changes to the costs of our products.
+Added: Note 3 – Digital Assets
During the years ended December 31, 2025 and 2024, we purchased and/or received immaterial amounts of digital assets.
−Removed: During the years ended December 31, 2023 and 2022, we recorded an immaterial amount and $ 204 million of impairment losses on digital assets, respectively.
−Removed: The table below summarizes the amounts shown on our consolidated balance sheet as of December 31, 2024 (in millions except units of digital assets).
−Removed: December 31, 2024
−Removed: Units Cost Basis Fair Value
+Added: During the year ended December 31, 2023, we recorded an immaterial amount of impairment losses on digital assets.
+Added: Refer to Note 2, Summary of Significant Accounting Policies for additional information regarding the Company’s adoption of the new crypto assets standard.
+Added: The table below summarizes the amounts shown on our consolidated balance sheets as of December 31, 2025 and 2024 (in millions except units of digital assets).
+Added: December 31, 2025 December 31, 2024
+Added: Units Cost Basis Fair Value Units Cost Basis Fair Value
Digital assets held:
Bitcoin 11,509 $ 386 $ 1,007 11,509 $ 386 $ 1,074
+Added: Other 1 1 1 2
Total $ 387 $ 1,008 $ 387 $ 1,076
−Removed: The following table provides details of the activities related to our digital assets for the year ended December 31, 2024 (in millions):
+Added: The following table provides details of the activities related to our digital assets for the years ended December 31, 2025 and 2024 (in millions):
+Added: Year Ended December 31,
Beginning balance at fair value $ 1,076 $ 487
−Removed: Unrealized gains, net 589
−Removed: Ending balance $ 1,076
−Removed: The following tables present summarized unaudited quarterly financial statement data for those impacted line items based on the Company’s adoption of the new crypto assets standard as described in Note 2, Summary of Significant Accounting Policies (in millions, except per share data):
−Removed: Consolidated Balance Sheets (unaudited):
−Removed: March 31, 2024 June 30, 2024 September 30, 2024
−Removed: Digital assets, net
−Removed: Before adoption $ 184 $ 184 $ 184
−Removed: Adjustments 638 538 545
−Removed: As adjusted $ 822 $ 722 $ 729
−Removed: Deferred tax assets
−Removed: Before adoption $ 6,769 $ 6,692 $ 6,486
−Removed: Adjustments ( 141 ) ( 119 ) ( 120 )
−Removed: As adjusted $ 6,628 $ 6,573 $ 6,366
−Removed: Three Months Ended
−Removed: Condensed Consolidated Statements of Operations (unaudited):
−Removed: March 31, 2024 June 30, 2024 September 30, 2024
−Removed: Other income (expense), net
−Removed: Before adoption $ 108 $ 20 $ ( 270 )
−Removed: Adjustments 335 ( 100 ) 7
−Removed: As adjusted $ 443 $ ( 80 ) $ ( 263 )
−Removed: Provision for (benefit from) income taxes
−Removed: Before adoption $ 409 $ 393 $ 601
−Removed: Adjustments 74 ( 22 ) 1
−Removed: As adjusted $ 483 $ 371 $ 602
−Removed: Net income attributable to common stockholders
−Removed: Before adoption $ 1,129 $ 1,478 $ 2,167
−Removed: Adjustments 261 ( 78 ) 6
−Removed: As adjusted $ 1,390 $ 1,400 $ 2,173
−Removed: Net income per share of common stock attributable to common stockholders
−Removed: Before adoption $ 0.37 $ 0.46 $ 0.68
−Removed: Adjustments 0.08 ( 0.02 ) —
−Removed: As adjusted $ 0.45 $ 0.44 $ 0.68
−Removed: Before adoption $ 0.34 $ 0.42 $ 0.62
−Removed: Adjustments 0.07 ( 0.02 ) —
−Removed: As adjusted $ 0.41 $ 0.40 $ 0.62
−Removed: The unaudited impact of adoption for the three months ended December 31, 2024 was to increase Digital assets, net by $ 347 million, with a corresponding increase in Other income (expense), net and decrease our Deferred tax assets by $ 77 million with a corresponding increase in our Provision for (benefit from) income taxes, thus contributing $ 270 million to Net income attributable to common stockholders.
−Removed: These amounts contributed $ 0.08 to both basic and diluted net income attributable to common stockholders per share of common stock for the three months ended December 31, 2024.
−Removed: There were no impairment losses recorded for any period during the year ended December 31, 2024.
−Removed: As a result, the unaudited interim balances of Digital assets, net did not change throughout the year ended December 31, 2024 prior to the adoption of the new crypto assets standard, which was adopted as of January 1, 2024.
−Removed: Note 4 – Goodwill and Intangible Assets
−Removed: Goodwill decreased $ 9 million within the automotive segment from $ 253 million as of December 31, 2023 to $ 244 million as of December 31, 2024.
−Removed: There were no accumulated impairment losses as of December 31, 2024 and 2023.
−Removed: The net carrying value of our intangible assets decreased from $ 178 million as of December 31, 2023 to $ 150 million as of December 31, 2024 mainly from amortization.
+Added: Unrealized (loss) gain, net ( 68 ) 589
+Added: Ending balance at fair value $ 1,008 $ 1,076
Note 4 – Fair Value of Financial Instruments
−Removed: ASC 820 states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
+Added: ASC 820, Fair Value Measurement, states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.
11 unchanged sentences
Money market funds 1,890 1,890 — — 1,753 1,753 — —
−Removed: Digital assets 1,076 1,076 — — Not applicable
+Added: Digital assets 1,008 1,008 — — 1,076 1,076 — —
Total $ 30,444 $ 2,898 $ 27,546 $ — $ 23,253 $ 2,829 $ 20,424 $ —
−Removed: All of our money market funds and digital assets are classified within Level I of the fair value hierarchy because they were valued using quoted prices in active markets.
−Removed: government securities, certificates of deposit, commercial paper, time deposits and corporate debt securities are classified within Level II of the fair value hierarchy and the market approach was used to determine fair value of these investments.
+Added: Our assets classified within Level I of the fair value hierarchy were valued using quoted prices in active markets and our assets classified within Level II of the fair value hierarchy utilized the market approach to determine fair value of the investments.
Our cash, cash equivalents and investments classified by security type as of December 31, 2025 and 2024 consisted of the following (in millions):
12 unchanged sentences
Certificates of deposit and time deposits 12,767 — — 12,767 — 12,767
+Added: Commercial paper 3,908 11 — 3,919 — 3,919
government securities 3,618 3 ( 1 ) 3,620 — 3,620
Corporate debt securities 117 1 — 118 — 118
−Removed: Commercial paper 470 — — 470 109 361
Money market funds 1,753 — — 1,753 1,753 —
Total cash, cash equivalents and short-term investments $ 36,549 $ 15 $ ( 1 ) $ 36,563 $ 16,139 $ 20,424
−Removed: As of December 31, 2024, the vast majority of our short-term investments had contractual maturity dates within one year.
+Added: As of December 31, 2025 and 2024, investments held and restricted for our insurance business were $ 254 million and $ 286 million, respectively.
+Added: As of December 31, 2025, the majority of our short-term investments had contractual maturity dates within one year.
Disclosure of Fair Values
22 unchanged sentences
Construction in progress 8,786 6,783
−Removed: 51,424 41,782
+Added: Property, plant and equipment 60,816 51,424
Accumulated depreciation ( 20,173 ) ( 15,588 )
−Removed: Total $ 35,836 $ 29,725
+Added: Property, plant and equipment, net $ 40,643 $ 35,836
Construction in progress is primarily comprised of ongoing construction and expansion of our facilities, equipment and tooling related to the manufacturing of our products as well as AI-related assets which have not yet been placed in service.
19 unchanged sentences
2025 December 31,
−Removed: Operating lease liabilities $ 4,603 $ 3,671
Accrued warranty reserve $ 6,132 $ 4,799
+Added: Operating lease liabilities 5,389 4,603
Other non-current liabilities 1,339 1,093
11 unchanged sentences
Other 1 2 3 — 4.70 - 5.75 %
−Removed: March 2025 - January 2031
+Added: January 2026 - January 2031
Total recourse debt 1 2 3 5,000
1 unchanged sentence
Automotive Asset-backed Notes 1,492 1,745 3,249 — 2.47 - 6.57 %
−Removed: September 2025 - June 2035
−Removed: China Working Capital Facility — 2,740 2,740 — 1.92 % April 2025 (2)
+Added: October 2026 - June 2035
+Added: China Working Capital Facility — 4,288 4,288 1,429 2.01 - 2.11 %
+Added: March 2026 - December 2026 (2)
Energy Asset-backed Notes 55 337 397 — 5.08 - 6.25 %
−Removed: December 2025-June 2050
Cash Equity Debt 21 212 240 — 5.25 - 5.81 %
12 unchanged sentences
Recourse debt:
−Removed: 2024 Notes $ 37 $ — $ 37 $ — 2.00 % May 2024
RCF Credit Agreement — — — 5,000 Not applicable January 2028
4 unchanged sentences
Automotive Asset-backed Notes 2,255 2,059 4,329 — 3.45 - 6.57 %
−Removed: July 2024 - May 2031
+Added: September 2025 - June 2035
+Added: China Working Capital Facility — 2,740 2,740 — 1.92 % April 2025 (2)
+Added: Energy Asset-backed Notes 54 434 493 — 4.80 - 6.25 %
+Added: December 2025 - June 2050
Cash Equity Debt 30 299 338 — 5.25 - 5.81 %
July 2033 - January 2035
−Removed: Energy Asset-backed Notes 4 8 13 — 4.80 % December 2026
Total non-recourse debt 2,339 5,532 7,900 —
2 unchanged sentences
Total debt and finance leases $ 2,456 $ 5,757
−Removed: (1) There are no restrictions on draw-down or use for general corporate purposes with respect to any available committed funds under our RCF Credit Agreement, except certain specified conditions prior to draw-down.
−Removed: Refer to the section below for the terms of the facility.
−Removed: (2) The contractual maturity date of the China Working Capital Facility is April 2025, renewable until March 2026 at our discretion.
+Added: (1) Refer to the respective sections below for restrictions on draw-down or use for general corporate purposes with respect to any available committed funds under our debt facilities, as applicable.
(2) As we have the intent and ability to refinance the loan on a long-term basis, we recorded it in Debt and finance leases, net of current portion in the consolidated balance sheets.
3 unchanged sentences
As of December 31, 2025, we were in material compliance with all financial debt covenants.
−Removed: During the second quarter of 2024, the 2024 Notes reached maturity and were fully settled.
−Removed: Additionally, in 2024, we fully settled the warrants entered into in connection with the issuance of the 2024 Notes, resulting in the issuance of 11.4 million shares of our common stock.
Credit Agreement
9 unchanged sentences
The fee for undrawn amounts is variable based on the Credit Rating and is currently 0.125 % per annum.
+Added: There are no restrictions on draw-down or use for general corporate purposes with respect to any available committed funds under our RCF Credit Agreement, except certain specified conditions prior to draw-down.
Automotive Asset-backed Notes
2 unchanged sentences
The cash flows generated by these automotive assets are used to service the principal and interest payments on the Automotive Asset-backed Notes and satisfy the SPEs’ expenses, and any remaining cash is distributed to the owners of the SPEs.
−Removed: We recognize revenue earned from the associated customer lease or financing contracts in accordance with our revenue recognition policy.
The SPEs’ assets and cash flows are not available to our other creditors, and the creditors of the SPEs, including the Automotive Asset-backed Note holders, have no recourse to our other assets.
In 2025, we transferred beneficial interests related to certain leased vehicles and/or financing receivables into SPEs and issued $ 1.41 billion in aggregate principal amount of Automotive Asset-backed Notes, with terms similar to our other previously issued Automotive Asset-backed Notes.
−Removed: The proceeds from the issuance, net of debt issuance costs, were $ 2.44 billion.
Energy Asset-backed Notes
8 unchanged sentences
China Working Capital Facility
−Removed: In April 2024, one of our subsidiaries entered into a loan agreement (the “China Working Capital Facility”) with lenders in China for an unsecured revolving facility of up to RMB 20.00 billion to be used for certain production expenditures as well as repayment of certain finance facilities.
−Removed: Borrowed funds bear interest at a rate equal to the Loan Prime Rate published by the People’s Bank of China minus 1.18 %.
−Removed: The China Working Capital Facility is non-recourse to our assets.
+Added: In 2024, one of our subsidiaries entered into a loan agreement (the “China Working Capital Facility”) with lenders in China for an unsecured revolving facility of up to RMB 20.00 billion to be used for certain production expenditures as well as repayment of certain finance facilities.
+Added: In March 2025, the China Working Capital Facility was amended to extend the availability of funds through April 2028.
+Added: In addition, the maturity date for each borrowing is the earlier of one year from the date the funds are drawn or April 2029.
+Added: In September 2025, the China Working Capital Facility was further amended to increase the aggregate lender commitment by RMB 20.00 billion.
+Added: Borrowings bear interest at a rate equal to the Loan Prime Rate published by the People’s Bank of China minus 0.89 % or 0.99 %, as applicable under the terms of the agreement.
Pledged Assets
−Removed: As of December 31, 2024 and 2023, we had pledged or restricted $ 5.16 billion and $ 4.64 billion of our assets (consisting principally of operating lease vehicles, financing receivables, restricted cash, and equity interests in certain SPEs) as collateral for our outstanding debt.
+Added: As of December 31, 2025 and 2024, we had pledged or restricted $ 3.89 billion and $ 5.16 billion, respectively, of our assets (consisting principally of operating lease vehicles, financing receivables, restricted cash, and equity interests in certain SPEs) as collateral for our outstanding debt.
Schedule of Principal Maturities of Debt
8 unchanged sentences
Note 10 – Leases
−Removed: We have entered into various operating and finance lease agreements for certain of our offices, manufacturing and warehouse facilities, retail and service locations, data centers, equipment, vehicles, and solar energy systems, worldwide.
+Added: We have entered into various operating and finance lease agreements for certain of our offices, manufacturing and warehouse facilities, retail and service locations, data centers, equipment, vehicles, and energy generation and storage systems, worldwide.
We determine if an arrangement is a lease, or contains a lease, at inception and record the lease in our financial statements upon lease commencement, which is the date when the underlying asset is made available for use by the lessor.
1 unchanged sentence
From a lessor perspective, the timing and pattern of transfer are the same for the non-lease components and associated lease component and, the lease component, if accounted for separately, would be classified as an operating lease.
−Removed: We have elected not to present short-term leases on the consolidated balance sheet as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that we are reasonably certain to exercise.
+Added: We have elected not to present short-term leases on the consolidated balance sheets as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that we are reasonably certain to exercise.
All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date.
17 unchanged sentences
Finance leases:
−Removed: Solar energy systems, net $ 21 $ 23
+Added: Energy generation and storage systems, net $ 19 $ 21
Property, plant and equipment, net 229 350
13 unchanged sentences
Total lease expense $ 1,896 $ 1,930 $ 1,704
−Removed: (1) Includes short-term leases and variable lease costs, which are immaterial.
+Added: (1) Includes short-term leases and variable lease costs, which are individually immaterial.
Other information related to leases where we are the lessee is as follows:
17 unchanged sentences
2026 $ 1,241 $ 80
+Added: 2027 1,127 72
+Added: 2028 1,012 27
Thereafter 2,668 23
4 unchanged sentences
Long-term portion of lease obligations $ 5,389 $ 152
−Removed: As of December 31, 2024, we have excluded from the table above additional operating leases that have not yet commenced with aggregate rent payments of $ 1.10 billion.
+Added: As of December 31, 2025, we have excluded from the table above additional operating leases that have not yet commenced with aggregate rent payments of $ 849 million.
These operating leases will commence between fiscal year 2026 and 2028 with lease terms of 2 years to 20 years.
+Added: In July 2025, we entered into a supply agreement for semiconductor contract manufacturing of our AI chips, which is expected to commence in 2027 or later.
+Added: If and when product specifications are met and production commences, we expect to account for the chipmaking machinery and equipment as leased assets as the terms of the arrangement convey a finance lease under ASC 842 Leases.
Operating Lease and Sales-type Lease Receivables
−Removed: We are the lessor of certain vehicle and solar energy system arrangements as described in Note 2, Summary of Significant Accounting Policies .
+Added: We are the lessor of certain vehicle and energy generation and storage systems as described in Note 2, Summary of Significant Accounting Policies .
As of December 31, 2025, maturities of our operating lease and sales-type lease receivables from customers for each of the next five years and thereafter were as follows (in millions):
4 unchanged sentences
The above table does not include vehicle sales to customers or leasing partners with a resale value guarantee as the cash payments were received upfront.
−Removed: For our solar PPA arrangements, customers are charged solely based on actual power produced by the installed solar energy system at a predefined rate per kilowatt-hour of power produced.
−Removed: The future payments from such arrangements are not included in the above table as they are a function of the power generated by the related solar energy systems in the future.
+Added: For our energy generation PPA arrangements, customers are charged solely based on actual power produced by the installed energy generation system at a predefined rate per kilowatt-hour of power produced.
+Added: The future payments from such arrangements are not included in the above table as they are a function of the power generated by the related energy generation systems in the future.
Net Investment in Sales-type Leases
11 unchanged sentences
In June 2019, we adopted the 2019 Equity Incentive Plan (the “2019 Plan”).
−Removed: The 2019 Plan provides for the grant of stock options, restricted stock, RSUs, stock appreciation rights, performance units and performance shares to our employees, directors and consultants.
+Added: The 2019 Plan provides for the grant of stock options, RSAs, RSUs, stock appreciation rights, performance units and performance shares to our employees, directors and consultants.
Stock options granted under the 2019 Plan may be either incentive stock options or nonstatutory stock options.
3 unchanged sentences
Vesting typically terminates when the employment or consulting relationship ends.
−Removed: As of December 31, 2024, 113.0 million shares were reserved and available for issuance under the 2019 Plan.
+Added: In November 2025, we adopted the Amended and Restated 2019 Equity Incentive Plan (the “A&R 2019 Plan”).
+Added: The A&R 2019 Plan has similar terms to the 2019 Plan, but increased the general shares reserved and available for issuance by 60.0 million shares and created a new special share reserve for our CEO of approximately 208.0 million shares.
+Added: As of December 31, 2025, 64.7 million shares were reserved and available for general issuance under the A&R 2019 Plan.
The following table summarizes our stock option and RSU activity for the year ended December 31, 2025:
19 unchanged sentences
As of December 31, 2025, there were 93.6 million shares available for issuance under the ESPP.
+Added: 2025 CEO Interim Award
+Added: On August 3, 2025, the Board of Directors granted and issued 96.0 million shares of restricted stock to our CEO (the “2025 CEO Interim Award”), which will vest on the second anniversary of the grant date, assuming his continued employment as either the CEO or as an executive responsible for product development or operations (as approved by disinterested members of the Board of Directors) through the vesting date.
+Added: Our CEO must pay the Company $ 23.34 per share (the “Purchase Price”) of restricted stock that vests, which is equal to the exercise price per share of the stock-based compensation plan awarded to Elon Musk in 2018 (the “2018 CEO Performance Award”).
+Added: Restricted stock under the 2025 CEO Interim Award will be immediately forfeited and returned (an “Early Forfeiture”) to the Company to preclude a “double dip” or windfall if, prior to vesting, there is a final, non-appealable judgment, order or decision of the Delaware courts with respect to the action captioned Tornetta v.
+Added: Elon Musk et al., C.A.
+Added: 2018-0408-KSJM (Del.
+Added: Ch.), or any pending or future appeal, including In re Tesla, Inc.
+Added: Derivative Litigation, Nos.
+Added: 10, 2025, 11, 2025 (Del.) (a “Tornetta Decision Event”) (see Note 13, Commitments and Contingencies ), that results in our CEO becoming able to exercise in full the 2018 CEO Performance Award.
+Added: If a Tornetta Decision Event results in our CEO becoming able to exercise options covered by the 2018 CEO Performance Award, but does not result in Early Forfeiture, then, if the Tornetta Decision Event occurs before the 2025 CEO Interim Award vests, shares covered by the 2025 CEO Interim Award will be reduced to the extent that (a) the sum of the 2025 CEO Interim Award shares and any amount of options exercisable under the 2018 CEO Performance Award exceeds (b) the total number of options subject to the 2018 CEO Performance Award in full (the “Excess Amount”), and if the Tornetta Decision Event occurs after the 2025 CEO Interim Award vests, then our CEO will return or otherwise repay us for shares issued under the 2025 CEO Interim Award (with us returning or repaying the Purchase Price) or forfeit options underlying the 2018 CEO Performance Award equal to the Excess Amount.
+Added: The “no double dip” provision means that if our CEO gains the ability to exercise the 2018 CEO Performance Award, there will be no material additional benefit to him because the total number of shares awarded under the 2025 CEO Interim Award together with the 2018 CEO Performance Award cannot exceed the number of shares underlying the 2018 CEO Performance Award.
+Added: Our CEO must hold shares covered by the 2025 CEO Interim Award for five years from the date of grant, subject to certain exceptions, including to satisfy taxes due in respect of vesting of the 2025 CEO Interim Award and/or to pay the Purchase Price.
+Added: The 2025 CEO Interim Award will vest on an accelerated basis prior to the second anniversary of the grant date if our CEO is in continued eligible service upon a change in control or his death.
+Added: Stock-based compensation expense associated with the 2025 CEO Interim Award is recognized over the requisite service period, based on the grant date fair value determined on August 15, 2025 (the date the issuance of the shares of restricted stock was no longer subject to conditionality or the “accounting grant date”), but only if and when the vesting of the award becomes probable.
+Added: Additionally, our CEO stock-based compensation expense represents a non-cash expense and is recorded as a selling, general and administrative operating expense in our consolidated statement of operations.
+Added: The grant date fair value of the 2025 CEO Interim Award is $ 26.06 billion.
+Added: The grant date fair value is based upon the closing market price of our common stock as of the accounting grant date, less the Purchase Price, adjusted to take into account an illiquidity discount due to the required holding period.
+Added: As of December 31, 2025, no stock-based compensation expense has been recorded related to the 2025 CEO Interim Award as vesting was not deemed probable.
+Added: Following the Delaware Supreme Court’s recent decision reversing the Court of Chancery’s rescission order and reinstating Mr.
+Added: Musk’s 2018 compensation package, the Special Committee, consistent with its general purpose, continues to consider, evaluate and determine all aspects of the retention and incentivization of Mr.
+Added: Musk and any methods, approaches or manners for doing so, including the 2018 CEO Performance Award and the 2025 CEO Interim Award.
+Added: If the 2025 CEO Interim Award is cancelled before vesting is deemed probable, no expense will be recognized relating to the award.
+Added: 2025 CEO Performance Award
+Added: On September 3, 2025 (the “2025 CEO Performance Award Grant Date”), the Board of Directors granted approximately 423.7 million shares of performance-based restricted stock to our CEO (the “2025 CEO Performance Award”), which was approved on November 6, 2025 by our shareholders (the “2025 CEO Performance Award Accounting Grant Date”).
+Added: Until such time as there are no shares under the 2025 CEO Performance Award that are not earned (the “Unearned Shares”), our CEO’s Unearned Shares will vote proportionately to the votes of all other shares of our capital stock that are present and entitled to vote at any annual or special meeting (or similar action) of our shareholders (including our CEO).
+Added: Generally, each of the 12 tranches of the 2025 CEO Performance Award will become “Earned Shares” upon our CEO remaining in Eligible Service (as defined below) and the certification by disinterested directors that the following have been achieved:
+Added: (i) the market capitalization milestone for such tranche and (ii) any one of the twelve operational milestones (clauses (i) and (ii), together the “Performance Milestones”).
+Added: Our CEO will be able to direct the vote of such Earned Shares.
+Added: Tranche # Number of Shares Subject to Tranche Market Capitalization Milestones (2) Operational Milestones Achievement Status
+Added: 1 35,311,992 $ 2.0 trillion
+Added: Achievement of any 1 of the 12 Operational Milestones -
+Added: 2 35,311,992 $ 2.5 trillion
+Added: Achievement of any 2 of the 12 Operational Milestones -
+Added: 3 35,311,992 $ 3.0 trillion
+Added: Achievement of any 3 of the 12 Operational Milestones -
+Added: 4 35,311,992 $ 3.5 trillion
+Added: Achievement of any 4 of the 12 Operational Milestones -
+Added: 5 35,311,992 $ 4.0 trillion
+Added: Achievement of any 5 of the 12 Operational Milestones -
+Added: 6 35,311,992 $ 4.5 trillion
+Added: Achievement of any 6 of the 12 Operational Milestones -
+Added: 7 35,311,992 $ 5.0 trillion
+Added: Achievement of any 7 of the 12 Operational Milestones -
+Added: 8 35,311,992 $ 5.5 trillion
+Added: Achievement of any 8 of the 12 Operational Milestones -
+Added: 9 35,311,992 $ 6.0 trillion
+Added: Achievement of any 9 of the 12 Operational Milestones -
+Added: 10 35,311,992 $ 6.5 trillion
+Added: Achievement of any 10 of the 12 Operational Milestones -
+Added: 11 35,311,992 $ 7.5 trillion
+Added: Achievement of any 11 of the 12 Operational Milestones (1) -
+Added: 12 35,311,992 $ 8.5 trillion
+Added: Achievement of any 12 of the 12 Operational Milestones (1) -
+Added: Total 423,743,904
+Added: (1) The 11th and 12th tranches are earned upon the later of (i) the date on which the last Performance Milestone applicable to such tranche is completed and (ii) the date on which the CEO succession framework developed by our CEO is approved by the Board of Directors.
+Added: (2) Market capitalization milestones are measured on a trailing average basis over both a six-month period and a 30-day period.
+Added: Achievement may also be measured over a one-year period in connection with the deemed achievement of certain product goals.
+Added: The operational milestones generally required for any shares to become Earned Shares are defined as follows:
+Added: Milestone # Operational Milestones (3)
+Added: 1 20 million Tesla vehicles delivered
+Added: 2 10 million active FSD subscriptions
+Added: 3 1 million bots delivered
+Added: 4 1 million Robotaxis in commercial operation
+Added: 5 $ 50 billion of Adjusted EBITDA
+Added: 6 $ 80 billion of Adjusted EBITDA
+Added: 7 $ 130 billion of Adjusted EBITDA
+Added: 8 $ 210 billion of Adjusted EBITDA
+Added: 9 $ 300 billion of Adjusted EBITDA
+Added: 10 $ 400 billion of Adjusted EBITDA (4)
+Added: 11 $ 400 billion of Adjusted EBITDA (4)
+Added: 12 $ 400 billion of Adjusted EBITDA (4)
+Added: (3) Adjusted EBITDA is defined as net income (loss) attributable to common stockholders before interest expense, provision (benefit) for income taxes, depreciation, amortization and impairment, stock-based compensation and digital assets gains and losses for the four consecutive quarters that immediately precede such determination date.
+Added: (4) Meeting the last three Adjusted EBITDA operational milestones requires achieving Adjusted EBITDA of $ 400 billion in three non-overlapping periods, each made up of four consecutive quarters.
+Added: The vesting date for each tranche of shares depends on when such shares become Earned Shares, which is based on the achievement of Performance Milestones.
+Added: Generally, shares earned prior to the 5th anniversary of the 2025 CEO Performance Award Grant Date vest on the 7.5th anniversary, and shares that are earned after the 5th anniversary of the 2025 CEO Performance Award Grant Date vest on the 10th anniversary (each such 7.5 and 10-year period, a “Post-Milestone Service Period”), in each case our CEO must maintain continued employment either as our CEO or as an executive officer responsible for product development or operations through the applicable Post-Milestone Service Period (“Eligible Service”).
+Added: Upon vesting, the vested shares will be reduced by an offset amount of $ 334.09 per share, unless our CEO elects to pay such amounts in cash.
+Added: Unearned Shares will be forfeited and returned upon the 10-year anniversary of the 2025 CEO Performance Award Grant Date.
+Added: Unvested shares (including any Earned Shares that have not vested) will be forfeited upon cessation of Eligible Service.
+Added: Any stock-based compensation expense related to forfeited shares will be reversed during the period in which such a forfeiture occurs.
+Added: Our CEO must hold shares for five years after they become Earned Shares (regardless of whether such Earned Shares vest), subject to exceptions on or after vesting for (i) a change in control, (ii) satisfying taxes due in respect of vesting or (iii) transfers for estate planning purposes that involve a mere change of form or as may be permitted by our disinterested directors in their discretion consistent with our internal policies.
+Added: Stock-based compensation expense recognition commences when an operational milestone is considered probable of achievement regardless of the progress made towards achieving the next market capitalization milestone.
+Added: The probability of meeting an operational milestone is based on a subjective assessment of the product roadmap, regulatory environment, industry and adoption trends, competitive environment, macroeconomic conditions and risks, and our future financial projections, among other estimates and assumptions.
+Added: These inputs, which are subjective and generally require significant judgment, are based on historical experience, as appropriate, and on various other assumptions that we believe to be reasonable under the circumstances.
+Added: Changes in the accounting estimates are reasonably likely to occur from period to period.
+Added: Accordingly, actual results could differ significantly from the estimates made by our management.
+Added: As of December 31, 2025, we determined that the operational milestone involving the delivery of 20 million Tesla vehicles, is probable over the term of the award based on our current assumptions.
+Added: Once an operational milestone is considered probable of achievement, stock-based compensation expense associated with the tranche will be recognized over the relevant Post-Milestone Service Period, which is based on the expected achievement date of the operational milestone.
+Added: By design of this award, the recognition period will be approximately 7.5 or 10 years from the 2025 CEO Performance Award Accounting Grant Date.
+Added: Stock-based compensation expense associated with this award is recorded as Selling, general and administrative expense on our consolidated statement of operations.
+Added: As of December 31, 2025, based on our current estimate of the achievement date, we had unrecognized stock-based compensation expense of $ 10.23 billion for the operational milestone that was considered probable of achievement over the term of the award, which we expect to be recognized over 9.7 years.
+Added: As of December 31, 2025, we had unrecognized stock-based compensation expense of $ 105.82 billion to $ 120.37 billion for the operational milestones that were considered not probable of achievement.
+Added: From the 2025 CEO Performance Award Accounting Grant Date to December 31, 2025, we recorded stock-based compensation expense of $ 162 million related to the 2025 CEO Performance Award.
Fair Value Assumptions
9 unchanged sentences
Grant date fair value per share $ 178.36 $ 114.29 $ 121.62
−Removed: The fair value of RSUs with service or service and performance conditions is measured on the grant date based on the closing fair market value of our common stock.
The risk-free interest rate is based on the U.S.
1 unchanged sentence
Treasury notes with maturities approximating each grant’s expected life.
−Removed: We use our historical data in estimating the expected term of our employee grants.
−Removed: The expected volatility is based on the average of the implied volatility of publicly traded options for our common stock and the historical volatility of our common stock.
+Added: We use our historical data in estimating the expected award term of our employee grants.
+Added: The expected share price volatility is based on the average of the implied volatility of publicly traded options for our common stock and the historical volatility of our common stock.
+Added: The fair value of restricted stock-based awards that have market, service and performance conditions is estimated on the grant date using a Monte Carlo simulation model.
+Added: The weighted-average assumptions used in the Monte Carlo simulation model for the purpose of determining the grant date fair value of the 2025 CEO Performance Award is as follows:
+Added: Expected award term (in years) (1) 9.8
+Added: Expected share price volatility 60 %
+Added: Dividend yield — %
+Added: Risk-free rate of return 4.06 %
+Added: Dilution adjustment 15 %
+Added: Illiquidity discount (2) 0 % - 14 %
+Added: Grant date fair value per share (3) $ 284.24 - $ 337.74
+Added: (1) The expected award term is the period from the shareholder approval date to the end of the performance period.
+Added: (2) The illiquidity discount was determined using a valuation model that uses the same expected share price volatility applied in the Monte Carlo simulation model and tax rates utilized are equal to the federal tax rate, plus our best estimate of personal tax rates based on available payroll information.
+Added: (3) The stock-based compensation expense recognized will depend on the date a given tranche vests if at all.
+Added: The range in grant date fair value per share reflects differences in any applicable holding period that may be in effect post-vesting for each tranche.
+Added: The fair value of RSAs and RSUs with service or service and performance conditions is measured on the grant date based on the closing fair market value of our common stock less any purchase price or offset amount, adjusted to take into account any illiquidity discounts due to applicable required holding periods that are in effect post-vesting.
Other Performance-Based Grants
From time to time, the Compensation Committee of our Board of Directors grants certain employees performance-based RSUs and stock options.
−Removed: As of December 31, 2024, we had unrecognized stock-based compensation expense of $ 490 million under these grants to purchase or receive an aggregate 5.0 million shares of our common stock.
+Added: For the year ended December 31, 2025, we granted 8.4 million shares of other performance awards with grant date fair value, net of forfeitures, of $ 1.70 billion.
+Added: For the years ended December 31, 2024 and 2023, the shares granted were not material.
+Added: As of December 31, 2025, we had unrecognized stock-based compensation expense of $ 1.79 billion under these grants to purchase or receive an aggregate 13.0 million shares of our common stock.
For awards probable of achievement, we estimate the unrecognized stock-based compensation expense of $ 831 million will be recognized over a weighted-average period of 3.3 years.
−Removed: For the years ended December 31, 2024, 2023 and 2022, stock-based compensation expense related to these grants, net of forfeitures, were not material.
+Added: For the year ended December 31, 2025, we recorded $ 323 million of stock-based compensation expense related to these grants, net of forfeitures.
+Added: For the years ended December 31, 2024 and 2023, stock-based compensation expense related to these grants, net of forfeitures, were immaterial .
Summary Stock-Based Compensation Information
7 unchanged sentences
Total $ 2,825 $ 1,999 $ 1,812
−Removed: Our income tax benefits recognized from stock-based compensation arrangements were immaterial while we were under full valuation allowances on our U.S.
−Removed: deferred tax assets during the year ended December 31, 2022.
−Removed: With the release of the valuation allowance associated with our federal and certain state deferred tax assets in 2023, income tax benefits recognized from stock-based compensation expense during the years ended December 31, 2024 and 2023 were $ 371 million and $ 326 million, respectively.
+Added: Income tax benefits recognized from stock-based compensation expense during the years ended December 31, 2025, 2024 and 2023 were $ 517 million, $ 371 million and $ 326 million, respectively.
During the years ended December 31, 2025, 2024 and 2023, stock-based compensation expense capitalized to our consolidated balance sheets was $ 238 million, $ 198 million and $ 199 million, respectively.
21 unchanged sentences
Total provision for (benefit from) income taxes $ 1,423 $ 1,837 $ ( 5,001 )
−Removed: The reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the years ended December 31, 2024, 2023 and 2022 was as follows (in millions):
+Added: Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 2, Summary of Significant Accounting Policies , the reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year ended December 31, 2025 was as follows (in millions, except for percentages):
+Added: Amount Percent
+Added: federal statutory tax rate $ 1,108 21.0 %
+Added: Foreign tax effects
+Added: Statutory tax rate difference between China and United States 60 1.1
+Added: Withholding tax 361 6.8
+Added: Other ( 37 ) ( 0.7 )
+Added: Other foreign jurisdictions 331 6.3
+Added: Research and development tax credits ( 352 ) ( 6.7 )
+Added: Foreign tax credits ( 327 ) ( 6.2 )
+Added: Changes in valuation allowances 389 7.5
+Added: Nontaxable or nondeductible items
+Added: Nontaxable manufacturing credits ( 354 ) ( 6.7 )
+Added: Stock-based compensation ( 172 ) ( 3.3 )
+Added: Changes in unrecognized tax benefits 194 3.7
+Added: Other adjustments 139 2.6
+Added: Effective tax rate $ 1,423 27.0 %
+Added: The reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU 2023-09 was as follows (in millions):
Year Ended December 31,
−Removed: 2024 2023 2022
Tax at statutory federal rate $ 1,887 $ 2,094
9 unchanged sentences
Provision for (benefit from) income taxes $ 1,837 $ ( 5,001 )
+Added: Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 2, Summary of Significant Accounting Policies , cash paid for income taxes, net of refunds, during the year ended December 31, 2025 was as follows (in millions):
+Added: California 86
+Added: Other states 65
+Added: Other countries 302
+Added: Total cash paid for income taxes, net of refunds $ 1,232
+Added: Cash paid for income taxes, net of refunds, during the years ended December 31, 2024 and 2023 was $ 1.33 billion and $ 1.12 billion, respectively.
Deferred tax assets (liabilities) as of December 31, 2025 and 2024 consisted of the following (in millions):
20 unchanged sentences
As of December 31, 2025, we maintained valuation allowances of $ 1.77 billion for deferred tax assets that are not more likely than not to be realized, which primarily included our California deferred tax assets, U.S.
−Removed: foreign tax credits and certain foreign operating losses.
−Removed: The valuation allowance on our net deferred tax assets increased by $ 332 million during the year ended December 31, 2024, and decreased by $ 6.46 billion and $ 1.73 billion during the years ended December 31, 2023 and 2022, respectively.
−Removed: The valuation allowance increase during the year ended December 31, 2024 was primarily due to the changes of our California deferred tax assets, U.S.
−Removed: foreign tax credits and certain foreign operating losses.
+Added: foreign tax credits and certain capitalized foreign expenses.
+Added: The valuation allowance on our net deferred tax assets increased by $ 541 million and $ 332 million during the years ended December 31, 2025 and 2024, respectively, and decreased by $ 6.46 billion during the year ended December 31, 2023.
+Added: The changes in valuation allowances during the years ended December 31, 2025 and 2024 were primarily due to the changes of our California deferred tax assets, U.S.
+Added: foreign tax credits and certain capitalized foreign expenses.
The change in valuation allowance during the year ended December 31, 2023 was primarily due to the release of our valuation allowance with respect to our U.S.
2 unchanged sentences
federal and certain state deferred tax assets are realizable and released the valuation allowance on these deferred tax assets.
−Removed: The valuation allowance change during the years ended December 31, 2022 was primarily due to changes in our U.S.
−Removed: deferred tax assets and liabilities.
Our deferred tax assets without a valuation allowance are more likely than not to be realized given the expectation of future earnings in the respective jurisdictions.
−Removed: As of December 31, 2024, we had $ 4.34 billion of federal and $ 8.59 billion of state net operating loss carry-forwards available to offset future taxable income, an immaterial amount of which, if not utilized, will begin to expire in 2026 for federal and 2025 for state purposes.
+Added: As of December 31, 2025, we had $ 3.56 billion of federal and $ 8.22 billion of state net operating loss carry-forwards available to offset future taxable income, an immaterial amount of which, if not utilized, will begin to expire in 2026.
Federal and state laws can impose substantial restrictions on the utilization of net operating loss and tax credit carry-forwards in the event of an “ownership change,” as defined in Section 382 of the Internal Revenue Code.
12 unchanged sentences
Increases in balances related to prior year tax positions 59
−Removed: Decreases in balances related to prior year tax positions ( 12 )
+Added: Decreases in balances related to settlement with tax authorities ( 6 )
Increases in balances related to current year tax positions 255
2 unchanged sentences
Increases in balances related to prior year tax positions 51
−Removed: Decreases in balances related to settlement with tax authorities ( 6 )
+Added: Decreases in balances related to prior year tax positions ( 27 )
Increases in balances related to current year tax positions 227
+Added: Decreases in balances related to settlement with tax authorities ( 4 )
Decreases in balances related to expiration of the statute of limitations ( 4 )
18 unchanged sentences
state and foreign jurisdictions.
−Removed: Given the uncertainty in timing and outcome of our tax examinations, an estimate of the range of the reasonably possible change in gross unrecognized tax benefits within twelve months cannot be made at this time.
Note 13 – Commitments and Contingencies
−Removed: Operating Lease Arrangement in Buffalo, New York
−Removed: We have an operating lease arrangement through the Research Foundation for the SUNY Foundation with respect to Gigafactory New York.
−Removed: Under the lease and a related research and development agreement, we are continuing to further develop the facility.
−Removed: Under this agreement, we are obligated to, among other things, meet employment targets as well as specified minimum numbers of personnel in the State of New York and in Buffalo, New York and spend or incur $ 5.00 billion in combined capital, operational expenses, costs of goods sold and other costs in the State of New York during the 10 -year period beginning April 30, 2018.
−Removed: On an annual basis during the initial lease term, as measured on each anniversary of such date, if we fail to meet these specified investment and job creation requirements, it may result in our incurring financial liabilities in the form of “program payments” which would not be expected to have a material adverse effect to our financial operations, the termination of our lease at Gigafactory New York, and/or the need to adjust certain of our operations.
−Removed: In 2021, an amendment was executed to extend our overall agreement to spend or incur $ 5.00 billion in combined capital, operational expenses, costs of goods sold and other costs in the State of New York through December 31, 2029.
−Removed: As of December 31, 2024, we have met and expect to meet the requirements under this arrangement, as may be modified and discussed from time to time, based on our current and anticipated level of operations.
−Removed: Operating Lease Arrangement in Shanghai, China
−Removed: We have an operating lease arrangement for an initial term of 50 years with the local government of Shanghai for land use rights where we have been constructing Gigafactory Shanghai.
−Removed: Under the terms of the arrangement, we are required to spend RMB 14.08 billion in capital expenditures by the end of 2023, which was achieved in 2023, and to generate RMB 2.23 billion of annual tax revenues starting at the end of 2023.
−Removed: As of December 31, 2024 and 2023, we had met and expect to meet the tax revenue requirements based on our current level of spend and sales.
Legal Proceedings
Litigation Relating to 2018 CEO Performance Award
−Removed: On June 4, 2018, a purported Tesla stockholder filed a putative class and derivative action in the Delaware Court of Chancery against Elon Musk and the members of Tesla’s board of directors as then constituted, alleging corporate waste, unjust enrichment and that such board members breached their fiduciary duties by approving the stock-based compensation plan awarded to Elon Musk in 2018 (the “2018 CEO Performance Award”).
+Added: On June 4, 2018, a purported Tesla stockholder filed a putative class and derivative action in the Delaware Court of Chancery against Elon Musk and the members of Tesla’s board of directors as then constituted, alleging corporate waste, unjust enrichment and that such board members breached their fiduciary duties by approving the 2018 CEO Performance Award.
Trial was held November 14-18, 2022.
7 unchanged sentences
A final judgment was entered by the Court, and the director defendants and Tesla appealed the decisions to the Delaware Supreme Court.
+Added: Tesla and the Director Defendants filed their response briefs on March 11, 2025.
+Added: Plaintiffs filed their opening brief on April 25, 2025, and reply briefs were filed on May 16, 2025.
+Added: Oral argument occurred on October 15, 2025.
+Added: On December 19, 2025, the Delaware Supreme Court reversed the Court of Chancery’s rescission order, reinstating Mr.
+Added: Musk’s 2018 compensation package, and awarded $ 1 in nominal damages.
+Added: The Court also significantly reduced the attorney fee award.
Litigation Related to Directors’ Compensation
4 unchanged sentences
Pursuant to the terms of the agreement, Tesla provided notice of the proposed settlement to stockholders of record as of July 14, 2023.
−Removed: The Court held a hearing regarding the settlement on October 13, 2023, after which it took the settlement and plaintiff counsels’ fee request under advisement.
+Added: The Court held a hearing regarding the settlement on October 13, 2023, after which it took the settlement and Plaintiff’s counsel fees request under advisement.
On January 8, 2025, the Court approved the settlement and awarded Plaintiff’s counsel fees in the amount of approximately $ 176 million.
A final judgment was entered by the Court on January 13, 2025.
−Removed: Tesla intends to appeal the Court’s fee award on or before the appeal deadline of February 12, 2025.
−Removed: The settlement is not expected to have an adverse impact on our results of operations, cash flows or financial position.
+Added: The Company disagrees with the amount of attorneys’ fees awarded by the court.
+Added: On February 10, 2025, Tesla appealed the attorneys’ fee award amount to the Delaware Supreme Court.
+Added: Tesla did not appeal the Delaware Court of Chancery’s approval of the underlying settlement.
+Added: Also on February 10, 2025, a single shareholder appealed the approval of the settlement.
+Added: This shareholder’s appeal does not seek to alter any material terms (e.g., financial contributions or the defendants’ obligations under the Settlement Agreement).
+Added: The Delaware Court of Chancery had previously rejected this shareholder’s objections when approving the Settlement Agreement.
+Added: Tesla’s appeal of the attorneys’ fee award and the single shareholder’s appeal have been fully briefed.
+Added: Oral argument occurred on October 29, 2025, and the parties are awaiting a decision.
+Added: Because neither Tesla’s appeal nor the shareholder’s appeal seeks to vacate the Settlement Agreement or materially modify its terms, the Company implemented the provisions of the Settlement Agreement in May 2025 by cancelling the options requiring cancellation under its terms.
+Added: In connection with the settlement, Tesla received $ 277 million from certain directors and paid Plaintiff’s counsel fees of $ 176 million (which, as noted above, the Company is appealing) in the three months ended March 31, 2025.
+Added: We recorded a $ 31 million reversal of previously recognized stock-based compensation expense in association with the returned awards and increased our provision for income taxes in relation to the return of directors’ compensation.
+Added: As the settlement was an equity transaction, the net impact to additional paid-in-capital was $ 110 million in the three months ended March 31, 2025.
Litigation Relating to Potential Going Private Transaction
−Removed: Between August 10, 2018 and September 6, 2018, nine purported stockholder class actions were filed against Tesla and Elon Musk in connection with Mr.
−Removed: Musk’s August 7, 2018 Twitter post that he was considering taking Tesla private.
−Removed: On January 16, 2019, Plaintiffs filed their consolidated complaint in the United States District Court for the Northern District of California and added as defendants the members of Tesla’s board of directors.
−Removed: The consolidated complaint asserts claims for violations of the federal securities laws and seeks unspecified damages and other relief.
−Removed: The parties stipulated to certification of a class of stockholders, which the court granted on November 25, 2020.
−Removed: Trial started on January 17, 2023, and on February 3, 2023, a jury rendered a verdict in favor of the defendants on all counts.
−Removed: After trial, plaintiffs filed a motion for judgment as a matter of law and a motion for new trial, which the Court denied and judgement was entered in favor of defendants on July 11, 2023.
−Removed: On November 6, 2024, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s dismissal of all claims.
Between October 17, 2018 and March 8, 2021, seven derivative lawsuits were filed in the Delaware Court of Chancery, purportedly on behalf of Tesla, against Mr.
1 unchanged sentence
Musk, among other things.
−Removed: Several of those actions were consolidated, and all have been stayed.
+Added: Several of those actions were consolidated.
+Added: All the non-consolidated cases have been dismissed with prejudice through a stipulation and order.
+Added: A stipulation for dismissal with prejudice of the consolidated case was filed on December 24, 2025, and the parties are waiting for the court to approve it.
In addition to these cases, two derivative lawsuits were filed on October 25, 2018 and February 11, 2019 in the U.S.
1 unchanged sentence
Musk and the members of the Tesla board of directors as then constituted.
−Removed: Those cases have also been consolidated and stayed.
+Added: Those cases were also consolidated, and on April 25, 2025, were dismissed with prejudice through a stipulation and order.
On October 21, 2022, a lawsuit was filed in the Delaware Court of Chancery by a purported shareholder of Tesla alleging, among other things, that board members breached their fiduciary duties in connection with their oversight of the Company’s 2018 settlement with the SEC, as amended.
Among other things, the plaintiff seeks reforms to the Company’s corporate governance and internal procedures, unspecified damages, and attorneys’ fees.
−Removed: The lawsuit has been stayed pending resolution of a motion to consolidate certain derivative lawsuits in the Delaware Court of Chancery referenced below.
−Removed: On November 15, 2021, JPMorgan Chase Bank filed a lawsuit against Tesla in the Southern District of New York alleging breach of a stock warrant agreement that was entered into as part of a convertible notes offering in 2014.
−Removed: Tesla denied any wrongdoing and filed multiple counterclaims.
−Removed: On November 27, 2024, the parties agreed to settle their claims.
+Added: The lawsuit has been stayed.
Certain Derivative Lawsuits in Delaware
Before converting from a Delaware to Texas corporation on June 13, 2024, three separate derivative actions brought by purported Tesla stockholders were filed in the Delaware Court of Chancery on May 24, June 10 and June 13, 2024, purportedly on behalf of Tesla, against current and former directors regarding topics involving Elon Musk and others, X Corp.
−Removed: (formerly Twitter) and x.AI.
+Added: (formerly Twitter) and xAI.
These suits assert various claims, including breach of fiduciary duty and breach of contract, and seek unspecified damages and other relief.
1 unchanged sentence
The Court consolidated two of the three cases.
+Added: Tesla and the directors filed motions to dismiss, and oral argument on those motions occurred on October 22, 2025.
Litigation and Investigations Relating to Alleged Discrimination and Harassment
1 unchanged sentence
CRD’s amended complaint seeks monetary damages and injunctive relief.
−Removed: The case is currently in discovery.
−Removed: Trial is scheduled for September 15, 2025.
+Added: The trial is currently set for July 20, 2026.
Additionally, on June 1, 2022 the Equal Employment Opportunity Commission (“EEOC”) issued a cause finding against Tesla that closely parallels the CRD’s allegations.
On September 28, 2023, the EEOC filed a civil complaint against Tesla in the United States District Court for the Northern District of California asserting claims for race harassment and retaliation and seeking, among other things, monetary and injunctive relief.
−Removed: On June 16, 2022, two Tesla stockholders filed separate derivative actions in the U.S.
−Removed: District Court for the Western District of Texas, purportedly on behalf of Tesla, against certain of Tesla’s current and former directors.
−Removed: Both suits assert claims for breach of fiduciary duty, unjust enrichment, and violation of the federal securities laws in connection with alleged race and gender discrimination and sexual harassment.
−Removed: Among other things, plaintiffs seek declaratory and injunctive relief, unspecified damages payable to Tesla, and attorneys’ fees.
−Removed: On July 22, 2022, the Court consolidated the two cases and on September 6, 2022, plaintiffs filed a consolidated complaint.
−Removed: On November 7, 2022, the defendants filed a motion to dismiss the case and on September 15, 2023, the Court dismissed the action but granted plaintiffs leave to file an amended complaint.
−Removed: On November 2, 2023, plaintiff filed an amended complaint purportedly on behalf of Tesla, against Elon Musk.
−Removed: On December 19, 2023, the defendants moved to dismiss the amended complaint, which the Court granted on April 12, 2024, with leave for plaintiffs to amend.
−Removed: On May 15, 2024, plaintiffs filed a second amended consolidated complaint purportedly on behalf of Tesla, against Mr.
−Removed: On July 1, 2024, the defendants moved to dismiss the second amended consolidated complaint.
+Added: The case is in discovery with no trial date set.
Other Litigation Related to Our Products and Services
5 unchanged sentences
This case was later consolidated with several other proposed class actions, and a Consolidated Amended Complaint was filed on October 28, 2022, which seeks damages and other relief on behalf of all persons who purchased or leased from Tesla between January 1, 2016, to the present.
−Removed: On October 5, 2022, a proposed class action complaint was filed in the U.S.
−Removed: District Court for the Eastern District of New York asserting similar state and federal law claims against the same defendants.
−Removed: On September 30, 2023, the Court dismissed this action with leave to amend the complaint.
−Removed: On November 20, 2023, the plaintiff moved to amend the complaint, which Tesla opposed.
−Removed: On August 8, 2024, the Court denied the plaintiff’s motion for leave to file an amended complaint and entered judgment for Tesla.
−Removed: On September 5, 2024, the plaintiff filed a notice of appeal to United States Court of Appeals for the Second Circuit, and the parties are briefing the matter.
−Removed: On March 22, 2023, the plaintiffs in the Northern District of California consolidated action filed a motion for a preliminary injunction to order Tesla to (1) cease using the term “Full Self-Driving Capability” (FSD Capability), (2) cease the sale and activation of FSD Capability and deactivate FSD Capability on Tesla vehicles, and (3) provide certain notices to consumers about proposed court-findings about the accuracy of the use of the terms Autopilot and FSD Capability.
+Added: On March 22, 2023, the plaintiffs filed a motion for a preliminary injunction to order Tesla to (1) cease using the term “Full Self-Driving Capability” (FSD Capability), (2) cease the sale and activation of FSD Capability and deactivate FSD Capability on Tesla vehicles, and (3) provide certain notices to consumers about proposed court-findings about the accuracy of the use of the terms Autopilot and FSD Capability.
Tesla opposed the motion.
On September 30, 2023, the Court denied the request for a preliminary injunction, compelled four of five plaintiffs to arbitration, and dismissed the claims of the fifth plaintiff with leave to amend the complaint.
−Removed: On October 31, 2023, the remaining plaintiff in the Northern District of California action filed an amended complaint, which Tesla moved to dismiss, and on May 15, 2024, the Court granted in part and denied in part Tesla’s motion.
+Added: On October 31, 2023, the remaining plaintiff filed an amended complaint, which Tesla moved to dismiss, and on May 15, 2024, the Court granted in part and denied in part Tesla’s motion.
+Added: On May 6, 2025, the plaintiff filed a motion for class certification, which Tesla opposed, and on August 18, 2025, the Court certified a limited class comprised of California consumers who are not subject to an arbitration agreement.
+Added: On September 1, 2025, Tesla filed a petition in the United States Court of Appeals for the Ninth Circuit for permission to appeal the class certification order, and on December 18, 2025, the Ninth Circuit granted Tesla’s petition.
+Added: On January 5, 2026, the district court stayed the case pending resolution of the proceedings before the Ninth Circuit.
+Added: Tesla’s opening brief in the Ninth Circuit is due on March 12, 2026.
On October 2, 2023, a similar proposed class action was filed in San Diego County Superior Court in California.
10 unchanged sentences
On November 26, 2024, the court issued a final judgment in Tesla’s favor, and on December 23, 2024, the plaintiffs filed a notice of appeal to the United States Court of Appeals for the Ninth Circuit.
−Removed: On March 14, 2023, a proposed class action was filed against Tesla, Inc.
−Removed: District Court for the Northern District of California.
−Removed: Several similar complaints were also filed in the same court and these cases have now all been consolidated.
−Removed: These complaints allege that Tesla violates federal antitrust and warranty laws through its repair, service, and maintenance practices and seeks, among other relief, damages for persons who paid Tesla for repairs services or Tesla compatible replacement parts from March 2019 to March 2023.
−Removed: On July 17, 2023, these plaintiffs filed a consolidated amended complaint.
−Removed: On September 27, 2023, the court granted Tesla’s motion to compel arbitration as to three of the plaintiffs, and on November 17, 2023, the court granted Tesla’s motion to dismiss without prejudice.
−Removed: The plaintiffs filed a Consolidated Second Amended Complaint on December 12, 2023, which Tesla moved to dismiss.
−Removed: Plaintiffs also appealed the court’s arbitration order, which was denied.
−Removed: On June 17, 2024, the Court granted in part and denied in part Tesla’s motion to dismiss the Consolidated Second Amended Complaint.
+Added: Oral argument occurred on November 20, 2025, and on December 2, 2025, the Ninth Circuit issued a memorandum decision affirming the district court’s dismissal of the amended complaint.
+Added: On December 29, 2025, the Court’s clerk issued a mandate closing the case.
+Added: On August 4, 2025, a proposed class action was filed in the U.S.
+Added: District Court Western District of Texas against Tesla, Inc., Elon Musk, and certain current and former Company executives.
+Added: The complaint alleges that the defendants violated federal securities laws through alleged material misrepresentations in public filings regarding the effectiveness of Autopilot, Full-Self Driving (Supervised), and Robotaxi.
+Added: The complaint seeks monetary damages and other relief on behalf of persons who purchased Tesla stock between April 19, 2023, and June 22, 2025.
The Company intends to vigorously defend itself in these matters;
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We are unable to reasonably estimate the possible loss or range of loss, if any, associated with these claims, unless noted.
+Added: On August 1, 2025, a jury in the U.S.
+Added: District Court for the Southern District of Florida reached a verdict in a product liability trial relating to certain allegations regarding the use of our Autopilot technology in a 2019 accident that resulted in a fatality and injuries.
+Added: The jury awarded $ 129 million in total compensatory damages, finding the driver 67 % at fault and the Company 33 % at fault.
+Added: The jury also awarded $ 200 million in punitive damages.
+Added: On September 15, 2025, the Company filed a post-trial motion for judgment as a matter of law or, in the alternative, a new trial on all issues or an amended judgment to lesser compensatory and punitive damages.
+Added: Although we believe that the facts and law do not justify the damages awarded, the Company has recorded an immaterial accrual.
+Added: We have experienced, and we expect to continue to face, claims and regulatory scrutiny arising from or related to misuse or claimed failures or alleged misrepresentations of new technologies that we are pioneering.
+Added: We are unable to reasonably estimate the possible loss or range of loss, if any, associated with these claims, unless noted.
+Added: An unfavorable outcome in some or all of these proceedings could have a material adverse impact on results of operations or cash flows for a particular period.
+Added: Our view of these matters is subject to inherent uncertainties and may change in the future.
Certain Investigations and Other Matters
−Removed: We regularly receive requests for information, including subpoenas, from regulators and governmental authorities such as the National Highway Traffic Safety Administration, the National Transportation Safety Board, the Securities and Exchange Commission (“SEC”), the Department of Justice (“DOJ”), and various local, state, federal, and international agencies.
−Removed: The ongoing requests for information include topics such as operations, technology (e.g., vehicle functionality, vehicle incidents, Autopilot and FSD Capability), compliance, finance, data privacy, and other matters related to Tesla’s business, its personnel, and related parties.
+Added: We regularly receive requests for information, including subpoenas, from regulators and governmental authorities such as the National Highway Traffic Safety Administration, the National Transportation Safety Board, the SEC, the Department of Justice (“DOJ”), and various local, state, federal, and international agencies.
+Added: The ongoing requests for information include topics such as operations, technology (e.g., vehicle functionality, vehicle incidents, Autopilot and FSD Capability and Robotaxi), compliance, finance, data privacy, and other matters related to Tesla’s business, its personnel, and related parties.
We routinely cooperate with such formal and informal requests for information, investigations, and other inquiries.
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We cannot predict the outcome or impact of any ongoing matters.
−Removed: Should the government decide to pursue an enforcement action, there exists the possibility of a material adverse impact on our business, results of operation, prospects, cash flows, financial position or brand.
+Added: Should the government decide to pursue an enforcement action, there exists the possibility of a material adverse impact on our business, results of operations, prospects, cash flows, financial position or brand.
We are also subject to various other legal proceedings, risks and claims that arise from the normal course of business activities.
−Removed: For example, during the second quarter of 2023, a foreign news outlet reported that it obtained certain misappropriated data including, purportedly non-public Tesla business and personal information.
−Removed: Tesla has made notifications to potentially affected individuals (current and former employees) and regulatory authorities and we are working with certain law enforcement and other authorities.
−Removed: On August 5, 2023, a putative class action was filed in the United States District Court for the Northern District of California, purportedly on behalf of all U.S.
−Removed: individuals impacted by the data incident, followed by several additional lawsuits, that each assert claims under various state laws and seeks monetary damages and other relief.
+Added: For example, on August 5, 2023, a putative class action was filed in the United States District Court for the Northern District of California, purportedly on behalf of all U.S.
+Added: individuals impacted by a data misappropriation incident earlier that year.
+Added: Several additional lawsuits followed, each asserting claims under various state laws and seeking monetary damages and other relief.
If an unfavorable ruling or development were to occur in these or other possible legal proceedings, risks and claims, there exists the possibility of a material adverse impact on our business, results of operations, prospects, cash flows, financial position or brand.
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Note 14 – Variable Interest Entity Arrangements
−Removed: We have entered into various arrangements with investors to facilitate the funding and monetization of our solar energy systems and vehicles.
+Added: We have entered into various arrangements with investors to facilitate the funding and monetization of our energy generation systems and vehicles.
In particular, our wholly owned subsidiaries and fund investors have formed and contributed cash and assets into various financing funds and entered into related agreements.
−Removed: We have determined that the funds are VIEs and we are the primary beneficiary of these VIEs by reference to the power and benefits criterion under ASC 810.
−Removed: We have considered the provisions within the agreements, which grant us the power to manage and make decisions that affect the operation of these VIEs, including determining the solar energy systems and the associated customer contracts to be sold or contributed to these VIEs, redeploying solar energy systems and managing customer receivables.
+Added: We have determined that the funds are VIEs and we are the primary beneficiary of these VIEs by reference to the power and benefits criterion under ASC 810, Consolidation .
+Added: We have considered the provisions within the agreements, which grant us the power to manage and make decisions that affect the operation of these VIEs, including determining the energy generation systems and the associated customer contracts to be sold or contributed to these VIEs, redeploying energy generation systems and managing customer receivables.
We consider that the rights granted to the fund investors under the agreements are more protective in nature rather than participating.
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Operating lease vehicles, net 456 392
−Removed: Solar energy systems, net 2,310 3,278
+Added: Energy generation and storage systems, net 2,177 2,310
Other non-current assets 183 183
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Note 15 – Related Party Transactions
−Removed: Tesla periodically does business with certain entities with which its CEO and directors are affiliated, such as x.AI, SpaceX, The Boring Company, X Corp.
−Removed: and Redwood Materials, in accordance with our Related Person Transactions Policy.
−Removed: Such transactions have not had to date, and are not currently expected to have, a material impact on our consolidated financial statements.
+Added: Tesla periodically does business with certain entities with which its CEO and directors are affiliated, such as xAI, SpaceX, The Boring Company and Redwood Materials, in accordance with our Related Person Transactions Policy.
+Added: During the year ended December 31, 2025, we recognized $ 430 million of revenues and $ 285 million of cost of revenues from xAI for its purchase of our Megapack products in the ordinary course of business.
+Added: Other transactions with xAI and other related parties during the year ended December 31, 2025 were immaterial .
+Added: During the years ended December 31, 2024 and 2023, transactions with related parties were immaterial .
+Added: In January 2026, the Company entered into an agreement with xAI to invest approximately $ 2 billion to acquire shares of Series E Preferred Stock of xAI.
+Added: As the investment is not in-substance common stock and the fair value is not readily determinable, we will account for the equity investment using the measurement alternative in accordance with ASC 321, Investments – Equity Securities .
+Added: The equity investment will be initially recorded at cost on our consolidated balance sheet as a long-term investment subsequently adjusted only for observable price changes for identical or similar securities, net of any potential impairment, which will be evaluated quarterly.
+Added: We will recognize any changes in the basis of the equity investment in Other (expense) income, net in the consolidated statements of operations.
Note 16 – Segment Reporting and Information about Geographic Areas
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The automotive segment includes the design, development, manufacturing, sales and leasing of electric vehicles as well as sales of automotive regulatory credits.
−Removed: Additionally, the automotive segment is also comprised of services and other, which includes sales of used vehicles, non-warranty maintenance services and collision, part sales, paid Supercharging, insurance services revenue and retail merchandise sales.
−Removed: The energy generation and storage segment includes the design, manufacture, installation, sales and leasing of solar energy generation and energy storage products and related services and sales of solar energy systems incentives.
+Added: Additionally, the automotive segment also includes services and other, which includes sales of used vehicles, non-warranty maintenance services and collision, paid Supercharging sessions, automotive insurance business revenue, part sales and retail merchandise sales.
+Added: The energy generation and storage segment includes the design, manufacture, installation, sales and leasing of energy generation and storage products and related services and sales of energy generation incentives.
Our CODM does not evaluate operating segments using asset or liability information.
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Note 17 – Restructuring and Other
+Added: In 2025, we initiated certain actions in order to reduce costs and improve efficiency through convergence of AI chip design efforts.
+Added: As a result, we recognized $ 390 million of expenses, within our automotive segment, related to charges for supercomputer assets, contract terminations and employee terminations.
In the second quarter of 2024, we initiated and substantially completed certain restructuring actions to reduce costs and improve efficiency.
As a result, we recognized $ 583 million of employee termination expenses in Restructuring and other in our consolidated income statement.
−Removed: These expenses were substantially paid with an immaterial accrual remaining in Accrued liabilities and other in our consolidated balance sheet as of December 31, 2024.
−Removed: During the year ended December 31, 2022, we recorded an impairment loss of $ 204 million as well as realized gains of $ 64 million in connection with converting our holdings of digital assets into fiat currency.
−Removed: We also recorded other expenses of $ 36 million during the second quarter of the year ended December 31, 2022, related to employee terminations.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.