UPDATE: Tesla shares surged in premarket trading early on Thursday, climbing over 3.3% to $444.70, despite the company reporting its first-ever annual revenue decline. CEO Elon Musk announced a significant pivot towards artificial intelligence, revealing that production of the premium Model S and Model X will cease to make way for the manufacturing of the company’s humanoid robots, known as Optimus.
This development comes on the heels of Tesla’s fourth quarter 2025 earnings report, which narrowly exceeded Wall Street forecasts but marked a historic drop in annual revenue. Musk expressed optimism during the earnings call, stating, “I want to send a message of optimism about the future,” as he highlighted the growth potential in AI and robotics, predicting “an exciting, amazing era of abundance.”
Tesla will convert its production line at its Fremont, California factory to focus on Optimus robots, with a long-term goal of producing 1 million units of the unreleased humanoid robot. Musk remarked, “That is slightly sad, but it is time to bring the S and X programs to an end and shift to an autonomous future.”
In addition to the shift in production, Tesla confirmed plans to invest $2 billion in xAI, Musk’s artificial intelligence company, as part of its latest funding round. This investment was announced on January 16, 2025, despite previous lukewarm responses from investors regarding the proposal.
The company’s shareholder presentation emphasized, “Tesla is products and services that bring AI into the physical world,” while xAI is working on leading digital AI products, including its large language model, Grok.
The implications of these changes are profound, impacting Tesla’s workforce, production capabilities, and the overall landscape of the automotive and AI industries. Investors and consumers alike will be closely watching how these developments unfold in the coming months, as Tesla positions itself at the forefront of AI innovation.
As Tesla transitions away from its classic models, the future of electric vehicles and robotics is set to redefine industry standards. Keep an eye on Tesla’s next steps as they embark on this ambitious journey into the realm of AI and robotics.
