Tesla reveals $2 billion funding in Elon Musk’s xAI and formally kills the Mannequin S and Mannequin X

The strikes, exceptional even within the context of Musk’s unfettered administration model, underscore the profound transformation underway on the automotive maker as IT loses floor within the EV market to Chinese language rivals. Rather than the discontinued automotive fashions, Musk mentioned that Tesla will use the freed up manufacturing facility house to construct Optimus robots, a nonetheless largely experimental line of humanoid robots that Musk says will ultimately carry out all the pieces from family chores to surgical procedure.

Tesla executives emphasised that the funding in xAI would construct efficiencies for Tesla, as IT wouldn’t need to expend related assets on AI, and Musk mentioned IT would in the end assist Tesla handle the big fleets of autonomous autos and Optimus robots.

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

Shares of Tesla had 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 on account of a slowdown in EV gross sales due to the tip 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 more than likely path of AI was to assist all people acquire “common excessive revenue” 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 12 months.

Tesla has been pulling away from its roots as a carmaker lately, in favor of autonomous software program and robotics. “IT’s time to principally deliver the Mannequin S and X applications to an finish with an honorable discharge, as a result of we’re actually transferring right into a future that’s based mostly on autonomy,” Musk mentioned. 

Musk mentioned that Tesla was working 500 robotaxis throughout each Austin and San Francisco, and he mentioned 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 had 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 mentioned of Tesla’s robotaxi fleet that, as a result of Tesla was nonetheless within the “early section” of its fleet deployment and nonetheless doing a number of validation and testing, the “income and price per mile metrics should 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 the moment, in the event you have a look at Tesla autos, we’re utilizing Grok in there,” he mentioned.

Throughout his look on the World Financial Discussion board in Davos earlier this month, Musk mentioned that Tesla deliberate to start promoting Optimus robots by the tip of subsequent 12 months. By repurposing the house in its Fremont manufacturing facility, Tesla mentioned Wednesday, IT will be capable of construct 1 million Optimus robots annually.