Tesla‘s annual revenue has fallen for the first time ever with Elon Musk vowing to plough billions of pounds into artificial intelligence and robots.
The company saw its total revenue fall by 3 per cent in 2025 while profits tumbled by a massive 61 per cent, with its multi-billionaire tech boss and X owner announcing Tesla would no longer build its iconic Model S and Model X cars.
Tesla is instead shifting its focus into AI and self-driving vehicles as ‘a lot of our investors asked us to do this’.
It will splurge $20billion next year in what Musk described as the firm ‘making big investments for an epic future’.
The California factory that built the S and X models will now be used to produce its Optimus humanoid robots with the aim of making one million a year.
Tesla revealed $2billion will be invested in Musk’s xAI, but most of the cash will be spent on its Cybercab (a fully autonomous vehicle without pedals and a steering wheel), the Tesla semi-truck, Optimus robots and plants for battery and lithium production.
Musk said: ‘This is going to be a very big capex (capital expenditure) year. We’re making big investments for an epic future.’
The dramatic drop in Tesla’s profits and revenue comes after Musk’s controversial dive into politics and short-lived venture in Donald Trump’s DOGE department.
Tesla’s annual revenue has fallen for the first time ever with Elon Musk vowing to plough billions of pounds into artificial intelligence and robots
It sparked a wave of protests in the US and UK, with Tesla vehicles being targeted in a backlash against the billionaire tech tycoon.
Musk left the Trump administration in May last year amid a steep decline in sales of Tesla cars.
He has recently been embroiled in a row with the UK government over X’s Grok AI being used to generate indecent images of women and children.
Prime Minister Sir Keir Starmer vowed earlier this month to keep the pressure on Musk, with the tech boss hitting back and calling Britain ‘fascist’.
X has since announced that Grok would no longer be able to edit photos to portray real people in revealing clothing in places where it is against the law.
A statement read: ‘We have implemented technological measures to prevent the Grok account from allowing the editing of images of real people in revealing clothing such as bikinis.
‘This restriction applies to all users, including paid subscribers.’
Tesla joins Facebook-parent Meta, Microsoft and Alphabet in planning sharp increases in capital spending this year, as those companies invest heavily in hardware and data centres to support AI model training and customer demand.
Join the debate
Does Musk’s strategy make you MORE or LESS confident in Tesla’s future?
The California factory that built the S and X models will now be used to produce its Optimus humanoid robots (pictured) with the aim of making one million a year
Andrew Rocco, stock strategist at Zacks Investment Research, said he viewed the $20 billion as ‘necessary spending.’
‘If Optimus is going to be a best-selling product, the AI must be trained as well as possible,’ he said, adding the planned spending gives him confidence that Musk’s ‘sometimes loose timelines will actually be honoured’.
Tesla’s Chief Financial Officer Vaibhav Taneja said the company has more than $44 billion in cash and investments on the books that it can use to fund the investments.
He signalled this year was not likely to be the end of increased spending, adding the company could look to pay for the investments ‘through more debt or other means’.
Musk said Tesla was embarking on some of the spending projects not for fun, but rather ‘out of desperation’.
‘Can other people, please, for the love of God, in the name of all that is holy, can others please build this stuff?’ Musk said, referring to spending on cathode and lithium refining. ‘It’s very hard to build these things.’
Share or comment on this article:
Tesla’s annual revenue falls for first time ever as Elon Musk axes iconic electric car models and vows to plough billions into robots, self-drive moors and AI instead