Tesla reveals $2 billion investment in Elon Musk’s xAI and officially kills the Model S and Model X | Fortune

The strikes, outstanding even within the context of Musk’s unfettered administration fashion, underscore the profound transformation underway on the automobile maker because it loses floor within the EV market to Chinese language rivals. Rather than the discontinued automobile fashions, Musk stated that Tesla will use the freed up manufacturing unit house to construct Optimus robots, a nonetheless largely experimental line of humanoid robots that Musk says will ultimately carry out every little thing from family chores to surgical procedure.

Tesla executives emphasised that the funding in xAI would construct efficiencies for Tesla, because it wouldn’t must expend related sources on AI, and Musk stated it will in the end assist Tesla handle the large fleets of autonomous autos and Optimus robots.

“We’re simply doing what shareholders requested us to do, just about,” Musk stated Wednesday night on the decision, noting that “lots” of traders had requested for the funding in xAI. 

Shares of Tesla have been up about 1.8% in after-hours buying and selling on Wednesday following the outcomes.

Income was down 3% year-over-year within the fourth quarter, which some analysts have cited as a result of a slowdown in EV gross sales due to the top of federal tax credit. Nonetheless, Tesla beat Wall Road targets, posting $24.9 billion in income versus $24.8 billion estimates. 

Musk highlighted that Tesla had modified its mission to “construct a world of wonderful abundance,” from “to speed up the world’s transition to sustainable power,” and spoke about how the most probably path of AI was to assist all people get hold of “common excessive earnings” and higher medical care. The language used on the decision, which included point out of a hypothetical uncommon earth refinery, which “we do desperately want in America” hinted on the time he has spent with President Trump over the past yr.

Tesla has been pulling away from its roots as a carmaker not too long ago, in favor of autonomous software program and robotics. “It’s time to principally convey the Mannequin S and X packages to an finish with an honorable discharge, as a result of we’re actually shifting right into a future that’s primarily based on autonomy,” Musk stated. 

Musk stated that Tesla was working 500 robotaxis throughout each Austin and San Francisco, and he stated that it was conducting “randomly chosen paid rides” with no security driver in Austin, although it’s unclear presently what number of unsupervised rides have taken place. For the primary time, Tesla shared this quarter what number of of its prospects have been buying its Full Self Driving (FSD) software program. There have been 1.1 million subscriptions in 2025, up from 800,000 in 2024.

Musk has been making guarantees on autonomy for over a decade, although he has been far behind in his timelines and the corporate has but to ship a lot revenue from this line of its enterprise. On Wednesday’s earnings name, CFO Vaibhav Taneja stated of Tesla’s robotaxi fleet that, as a result of Tesla was nonetheless within the “early part” of its fleet deployment and nonetheless doing quite a lot of validation and testing, the “income and value per mile metrics usually are not significant to debate in the meanwhile.”

Taneja additionally talked up the funding in xAI, noting that Grok, the chatbot made by xAI, was already in use throughout Tesla’s fleet. “At present, in the event you take a look at Tesla autos, we’re utilizing Grok in there,” he stated.

Throughout his look on the World Financial Discussion board in Davos earlier this month, Musk stated that Tesla deliberate to start promoting Optimus robots by the top of subsequent yr. By repurposing the house in its Fremont manufacturing unit, Tesla stated Wednesday, will probably be capable of construct 1 million Optimus robots annually.