CEO Elon Musk kicked off the new year by unleashing several stunning surprises on shareholders, including a $2 billion investment by Tesla in one of his own enterprises, the artificial intelligence firm xAI, and the sudden discontinuation of two of the company’s car models, the Model S and the Model .
These actions, remarkable even within the framework of Musk’s unbridled management approach, highlight the far-reaching transformation taking place at the automaker as it cedes ground in the EV market to Chinese competitors. Musk stated that instead of the discontinued car models, Tesla will utilize the liberated factory space to manufacture Optimus robots, a still predominantly experimental line of humanoid robots that Musk claims will ultimately carry out tasks ranging from household duties to surgery.
Tesla executives stressed that the investment in xAI would enhance efficiencies for Tesla, as it would not need to allocate comparable resources to AI, and Musk stated that it would ultimately assist Tesla in managing the vast fleets of autonomous vehicles and Optimus robots.
“We’re essentially doing what shareholders requested of us,” Musk said during the call on Wednesday evening, noting that “numerous” investors had called for the investment in xAI.
Following the announcements, Tesla’s shares rose approximately 1.8% in after-hours trading on Wednesday.
Revenue decreased by 3% year-over-year in the fourth quarter, which some analysts attributed to a slowdown in EV sales stemming from the expiration of federal tax credits. Nevertheless, Tesla exceeded Wall Street expectations, reporting $24.9 billion in revenue compared to the estimated $24.8 billion.
Musk noted that Tesla had revised its mission from “to accelerate the world’s transition to sustainable energy” to “to build a world of amazing abundance,” and discussed how the most probable trajectory of AI was to enable all humans to attain “universal high income” and superior medical care. The language employed during the call, which included reference to a hypothetical rare earth refinery, “which we desperately need in America,” hinted at the time he had spent with President Trump over the past year.
Tesla has recently strayed from its automotive origins, favoring autonomous software and robotics. “It’s now time to essentially conclude the Model S and X programs with a dignified conclusion, as we are truly entering a future centered on autonomy,” Musk stated.
Musk stated that Tesla was running 500 robotaxis in both Austin and San Francisco, and that it was conducting “randomly chosen paid rides” without a safety driver in Austin, although it is currently unclear how many unsupervised rides have occurred. For the first time, Tesla disclosed this quarter the number of its customers buying its Full Self Driving (FSD) software. There were 1.1 million subscriptions in 2025, an increase from 800,000 in 2024.
Musk has been vowing about autonomy for over a decade, yet he has significantly lagged behind his timelines, and the company has yet to generate substantial profit from this aspect of its business. During Wednesday’s earnings call, CFO Vaibhav Taneja commented on Tesla’s robotaxi fleet, stating that since Tesla was still in the “initial phase” of fleet deployment and still engaged in extensive validation and testing, the “revenue and cost per mile metrics are not significant to discuss at present.”
Taneja also praised the investment in xAI, noting that Grok, the chatbot developed by xAI, was already in use throughout Tesla’s fleet. “Today, when you look at Tesla vehicles, we are utilizing Grok in them,” he stated.
During his participation in the World Economic Forum in Davos earlier this month, Musk stated that Tesla intended to start selling Optimus robots by the end of next year. Tesla announced on Wednesday that by reallocating space in its Fremont factory, it would be able to manufacture 1 million Optimus robots annually.