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Tesla to invest $2 billion in xAI, an artificial intelligence startup run by CEO Elon Musk. The company also confirmed its much-publicized Cybercab robotaxi is still slated to enter production sometime in 2025.
The twin announcements underline Musk’s push to remake Tesla from an electric carmaker into an AI-first company, a shift central to justifying its roughly $1.5 trillion valuation.
Tesla shares jumped about 3.5% after the initial announcement, but gains faded to around 1.8% once investors heard the scale of planned spending. Chief financial officer Vaibhav Taneja said capital expenditure will exceed $20 billion this year as Tesla builds factories for Cybercabs, humanoid robots, semi-trucks, and its long-promised Roadster.
Thomas Monteiro of Investing.com said Tesla is entering a transition phase, asking investors to focus less on car deliveries and more on the progress in autonomy. Rollout metrics for self-driving and robotaxis, he said, now matter more than vehicle sales.
Musk told analysts he expects fully self-driving to work across a quarter to half of the US by year-end. He has made similar predictions before without delivering at scale. Tesla currently operates only a limited robotaxi service in Austin, Texas.
The company also said it will stop making Model S sedans and Model X SUVs, freeing up factory space for robots. These vehicles now contribute only a small share of the sales.
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Tesla’s total revenue fell about 3% in 2025 to roughly $94.83 billion, its first annual decline. Price cuts have helped sustain demand, but competition has intensified, and US EV tax breaks have ended. Analysts expect deliveries of 1.77 million vehicles in 2026, an 8.2% rise.
Energy generation and storage revenue surged 25.5% to a record $3.84 billion in the December quarter, offering a rare bright spot as Tesla chases an AI-driven future.
Still, investors want proof. With regulatory hurdles, chip shortages, and Musk warning that early Cybercab and Optimus production will be ‘agonisingly slow’, Tesla’s AI bet now faces its toughest test yet.
