Tesla has reported its first annual drop in revenue, as the electric vehicle maker shifts more of its focus towards artificial intelligence and robotics. The company said total revenue fell by 3% in 2025, while profits dropped sharply, down 61% in the final three months of the year. Tesla also confirmed it will stop producing its Model S and Model X vehicles, ending an era for two of its longest-running models.
The California factory that previously built those cars will now be used to manufacture Tesla’s humanoid robots, known as Optimus, signalling a deeper push into robotics. The announcement comes at a challenging time for the company. In January, China’s BYD overtook Tesla to become the world’s largest electric vehicle maker. Tesla also disclosed a $2bn (£1.45bn) investment in xAI, the artificial intelligence company founded by Elon Musk.
Musk said the decision to invest in xAI reflected pressure from investors, despite mixed shareholder support. A recent vote on the proposal saw more shareholders oppose or abstain than approve the move. Last year, Tesla investors did back a record-breaking pay package for Musk, potentially worth close to $1tn, though it depends on the company achieving major growth in its market value over the next decade.
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