At Tesla’s manufacturing facility in Fremont, California, the automaker plans to make robots as an alternative of its older vehicles, because it gears as much as spend $20 billion this 12 months to fund what it views as a enterprise transformation.
“Overlook the Tesla you knew,” wrote analysts at Canaccord Genuity, in a word following Tesla’s fourth-quarter earnings report. “The Tesla of yesterday is gone. We consider Elon Musk has reached a definitive ‘burn the ships’ inflection level — a complete dedication to a imaginative and prescient that leaves no room for retreat.” The analysts suggest shopping for the inventory.
After capital expenditures dropped 24% final 12 months to $8.6 billion, Tesla indicated on Wednesday that the determine will greater than double in 2026 as the corporate shifts enterprise away from electrical autos, and additional into synthetic intelligence, with a deal with driverless expertise, humanoid robots and, finally, the chips that underpin these long-promised ambitions.
Tesla shares dropped 3.5% to shut at $417.89, bringing their January drop to greater than 7%.
Automotive income, which nonetheless accounts for about 70% of Tesla’s enterprise, declined 10% in 2025, as the corporate failed to supply new EV fashions and confronted heightened competitors throughout the globe, particularly from China’s BYD and Volkswagen and BMW in Europe. Complete income at Tesla fell final 12 months for the primary time on report.
On the earnings name following the report, Musk mentioned the corporate is ending manufacturing of its Mannequin S sedan and Mannequin X SUVs, which mixed made up lower than 3% of the corporate’s supply quantity final 12 months, however helped Tesla make EVs mainstream.
Musk mentioned the traces that had been producing these fashions in Fremont will probably be transformed right into a manufacturing facility for constructing Optimus robots, which have but to hit the market. The corporate has touted Optimus as a bipedal, clever robotic that can sometime be able to the whole lot from manufacturing facility work to surgical procedure and babysitting. He admitted that Optimus continues to be not in utilization in Tesla factories in a “materials method.”
In 2024, Musk mentioned Optimus may finally make Tesla a $25 trillion firm (the market cap sits at $1.4 trillion in the present day) and final 12 months mentioned that 80% of Tesla’s worth will finally come from the robots.
Tesla did not specify on this week’s earnings name how a lot of the $20 billion in capex this 12 months will probably be devoted to Optimus. CFO Vaibhav Taneja mentioned the cash will go in direction of initiatives at six factories, together with a refinery for making battery storage, in addition to in direction of improvement of its driverless Cybercab, Semi electrical truck and Optimus manufacturing facility.
“On prime of it, we’ll even be spending cash for constructing our AI compute infrastructure, and we’ll proceed investing in our current factories to construct extra capability after which additionally the associated infrastructure to go together with it,” Taneja mentioned.
‘Early phases of Optimus’
Whereas Musk mentioned that the corporate is planning to spin up a manufacturing line for Optimus that may construct one million items per 12 months, he acknowledged that, “we’re nonetheless very a lot on the early phases of Optimus,” and referred to it as a analysis and improvement venture.
“We would not count on to have any form of important Optimus manufacturing quantity till most likely finish of this 12 months,” mentioned Musk, who’s infamous for lacking self-imposed deadlines.
Along with its Optimus pursuits, Tesla plans to broaden its Robotaxi ride-hailing fleet within the U.S., and continues to be working to to meet its decade-old promise to ship a self-driving system that makes its vehicles secure to make use of and not using a human driver able to steer or brake at any time.
In 2025, Tesla launched a Robotaxi-branded ride-hailing app, and has been working a pilot service in Austin, Texas. Final week, Tesla executives mentioned that they had taken human security supervisors out of a handful of vehicles within the Austin fleet to conduct driverless passenger rides. The corporate additionally began a service within the San Francisco space final 12 months, however with a driver on the wheel.
The corporate mentioned in its investor deck on Wednesday that it plans to have protection in seven extra U.S. markets within the first half of this 12 months. These cities are Dallas, Houston, Phoenix, Miami, Orlando, Tampa and Las Vegas.
A Tesla Optimus robotic fingers out sweet in entrance of the Nasdaq MarketSite in New York, US, on Monday, Oct. 27, 2025.
Michael Nagle | Bloomberg | Getty Photographs
Along with all of the technical challenges and monetary commitments concerned with robots and driverless vehicles, Tesla faces hefty competitors in each areas. Alphabet’s Waymo is quickly increasing its robotaxi service within the U.S., whereas Baidu’s Apollo Go is rising in China. And in robots, Apptronik and Boston Dynamics are among the many U.S. gamers, with corporations like Unitree and Agibot in China.
One different space the place Musk mentioned the corporate expects to spend huge is in chips. He mentioned key suppliers like Samsung, Taiwan Semiconductor Manufacturing Co. and Micron cannot presumably produce sufficient {hardware} to fulfill Tesla’s wants.
“With a view to take away the constraint, the possible constraint in three or 4 years, we will need to construct a Tesla TeraFab, a really huge fab that features logic, reminiscence and packaging domestically,” Musk mentioned. “And that is truly additionally going to be crucial to make sure that we’re protected towards any geopolitical dangers.”
He added that, “We’ll be paranoid and be sure that we will proceed to construct batteries and robots and AI chips it doesn’t matter what occurs.”
The spending goal for this 12 months does not embrace any TeraFab plans, Taneja mentioned. Nor does it account for Musk’s imaginative and prescient to start photo voltaic cell manufacturing within the U.S.
Analysts at Barclays, who suggest holding Tesla’s inventory, wrote in a report on Thursday that whereas autos should be the corporate’s core enterprise, the top of the Mannequin S and X “marks the symbolic baton cross” into “bodily AI.”
“In case it wasn’t clear earlier than, it is greater than abundantly clear now that Tesla will not be an auto firm,” the analysts wrote.
