The simplest way to understand Tesla's economics: it's a car company that Wall Street prices like a software company, and the tension between those two identities explains almost everything about its financials. Automotive sales account for roughly 80% of Tesla's $94.8 billion in FY2025 revenue. That's Model Y (the volume workhorse), Model 3, the aging Model S and X, and Cybertruck. Tesla sells directly — no dealers, no middlemen, no haggling. You configure online, you pick up at a service center or get it delivered. This eliminates the typical 8-12% dealer margin but means Tesla bears the full cost of retail infrastructure, service, and inventory. Here's where it gets interesting. Regulatory credits — essentially pollution permits that Tesla sells to automakers who can't meet emissions standards — generated roughly $2.8 billion in FY2025. That's nearly pure profit with zero marginal cost. It's also a revenue stream that shrinks as competitors electrify their own fleets. Five years from now, this line item may not exist. Energy storage is the business most people underestimate. Tesla deployed 46.7 GWh of battery storage in FY2025 through Megapack (utility-scale, think grid-level batteries the size of shipping containers) and Powerwall (residential). This segment is growing faster than automotive and carries better margins because utility buyers care about reliability and total cost of ownership, not sticker price. A single Megapack installation can run $1.5-2 million. Full Self-Driving software sits at $8,000 one-time or $99/month subscription. It's supervised — meaning you still need to pay attention — and hasn't achieved the unsupervised autonomy that would unlock robotaxi economics. But every FSD subscription is essentially 90%+ gross margin software revenue attached to a hardware sale. If Tesla ever cracks true autonomy, this becomes the highest-margin business in automotive history. That's a big "if." The Supercharger network now generates revenue from non-Tesla vehicles after Ford, GM, Rivian, and others adopted Tesla's North American Charging Standard. What started as a cost center to reduce range anxiety has become infrastructure that competitors pay to use. Services, insurance, used vehicle sales, and merchandise fill out the rest. None individually massive, but collectively they represent Tesla's attempt to capture lifetime customer value rather than just the initial sale. The vertical integration is extreme. Tesla designs its own battery cells, motors, power electronics, vehicle software, infotainment, and autonomy hardware. It manufactures at Gigafactories in Fremont, Shanghai, Berlin, and Austin. This gives engineering speed and cost visibility but demands enormous capex — Tesla spent over $10 billion on property and equipment in FY2025 alone. Net income of $3.79 billion on $94.8 billion revenue gives a 4% net margin. For context, Toyota runs around 8-10%. The compression from 2022's ~12% net margin to today's 4% reflects aggressive price cuts to defend volume against BYD and Chinese competitors. The $1.44 trillion market cap — roughly 15x revenue and 380x earnings — only makes sense if you believe the software, energy, and autonomy optionality will eventually deliver margins that cars alone never will.