Topline
Tesla shares rose in premarket trading early on Thursday—despite the company reporting its first-ever drop in annual revenue—as CEO Elon Musk signaled a pivot to AI for the electric vehicle maker, saying it will end production of its S and X model cars and convert its manufacturing facilities to produce the company’s humanoid robots called Optimus.
Elon Musk said Tesla’s long-term goal is to manufacture 1 million Tesla Optimus robots at its California plant.
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Key Facts
In premarket trading early on Thursday, Tesla’s shares rose $444.70, up more than 3.3% from Wednesday’s closing.
The bump comes after Tesla released its fourth quarter 2025 earnings report, which narrowly beat Wall Street forecasts, but also highlighted the company’s first-ever decline in annual revenue.
In the company’s earnings call, Musk sounded upbeat, saying he wants to “send a message of optimism about the future,” and the growth of AI and robotics will lead to “an exciting, amazing era of abundance.”
Musk announced the company was ending production of its premium Model S and Model X cars, and its production line at Tesla’s Fremont, California factory will be converted to manufacture the company’s upcoming Optimus humanoid robots.
Musk said their long-term goal is to manufacture 1 million units of the unreleased robot at the California plant.
“That is slightly sad, but it is time to bring the S and X programs to an end and shift to an autonomous future,” Musk added.
What Do We Know About Tesla’s Investment In Xai?
In addition to ending Model S and X production to make way for Optimus robots, Tesla announced on January 16 that it had entered into an agreement to invest $2 billion in xAI as part of its latest funding round. xAI is Musk’s artificial intelligence company, which also owns and operates the billionaire’s social media platform X. The decision to invest in xAI comes despite the proposal receiving a lukewarm response from the company’s investors last year. In its earnings presentation deck for shareholders, the company said, “Tesla is products and services that bring AI into the physical world. Meanwhile, xAI is developing leading digital AI products and services, such as its large language model (Grok).”
Crucial Quote
“I think long-term Optimus will have a very significant impact on the US GDP…there are still many who doubt our ambitions for creating amazing abundance. We are confident it can be done, and we are making the right moves technologically to ensure that it does,” Musk said in his earnings call.
What To Watch For
The Tesla CEO also added that the company intends to start production of its Cybercab, a fully self driven car with no steering wheels and pedals, by April. The billionaire even claimed the company expects to make “far more Cybercabs than all of our other vehicles combined.” The Cybercabs are supposed to power Tesla’s Robotaxi service, which is currently undergoing limited testing in Austin.
Further Reading
Tesla Reports First Full-Year Revenue Decline Ever—Despite Topping Fourth-Quarter Estimates (Forbes)