Tesla reported its first annual revenue decline as the electric vehicle maker shifts focus to artificial intelligence and robotics, ending production of its Model S and Model X vehicles to make room for humanoid robot manufacturing.
The company reported a 3% decline in total revenues in 2025, while profits fell 61% in the last three months of the year. Tesla will now use the California manufacturing plant that made the Model S and Model X to produce its line of humanoid robots known as Optimus.
In January, China’s BYD overtook Tesla as the world’s biggest EV maker. Tesla also revealed a $2 billion investment in Musk’s artificial intelligence venture, xAI. “A lot of investors asked us to do this,” Musk said, though a recent shareholder vote on the xAI investment showed abstentions and votes against outnumbering those who approved.
Last year, investors voted to grant Musk a record-breaking pay package worth nearly $1 trillion. To collect that payout he must drastically raise the firm’s market value over the next 10 years. The company is ramping up spending by an estimated $20 billion. “It’s going to be a very big [capital expenditure] next year,” Musk said. “We’re making big investments for an epic future.”
Tesla shares rose about 2% in extended trading. Musk’s entry into politics, including a role in the Trump administration, has alienated parts of Tesla’s customer base. “The Model S and Model X have been low-volume vehicles for Tesla for a while now,” said Jessica Caldwell of Edmunds. “It makes sense to drop them and concentrate on higher-volume products like the Model 3 and Model Y.”
The question for shareholders is whether Tesla can successfully pivot from car manufacturing to AI and robotics while maintaining profitability.
