Elon Musk’s Tesla to invest $2B in xAI as EV – Business News
Tesla mentioned Wednesday it had agreed to invest about $2 billion in Elon Musk’s artificial intelligence startup xAI — and that manufacturing plans for its Cybercab robotaxi had been on monitor for this yr.
The information supported Musk’s plan to pivot Tesla from an electric vehicle maker to an AI company, which is essential to the company’s roughly $1.5 trillion valuation. Shares rose 3.8% though some analysts and buyers had been skeptical that the CEO would hit his own manufacturing launch targets, based mostly on earlier misses.
Tesla is “entering a transition phase” the place it’s asking buyers to underwrite potential income from self-driving software program in its vehicles and robotaxi business earlier than auto gross sales recuperate, mentioned Thomas Monteiro, senior analyst at Investing.com.
Tesla mentioned Wednesday it had agreed to invest about $2 billion in Elon Musk’s artificial intelligence startup xAI, as Tesla reported decrease gross sales and revenue. GIAN EHRENZELLER/EPA/Shutterstock
“(That) makes rollout metrics – not deliveries – the most important leading indicator from here,” Monteiro mentioned.
Tesla’s core EV business, which nonetheless accounts for many of the company’s present income, has been beneath pressure as rivals roll out newer fashions, usually at decrease costs. A US tax incentive for electric automobiles has additionally ended, and Musk’s far-right political rhetoric has alienated some clients.
Tesla’s core EV business, which nonetheless accounts for many of the company’s present income, has been beneath pressure as rivals roll out newer fashions, usually at decrease costs. A US tax incentive for electric automobiles has additionally ended, and Musk’s far-right political rhetoric has alienated some clients.
Tesla’s income fell about 3% to roughly $94.83 billion in 2025, marking the company’s first annual decline in income.
To defend volumes, Tesla has relied closely on reductions and incentives, and launched lower-priced trims of its best sellers. Wall Street expects the company to ship 1.77 million automobiles in 2026, representing an 8.2% increase, in accordance to Visible Alpha knowledge.
Investors have more and more targeted on Musk’s push into self-driving technology and robotics. Tesla Optimus robots, above. Tesla
Adjusted earnings per share of 50 cents in the fourth quarter topped Wall Street targets of 45 cents, in accordance to LSEG knowledge.
Despite the gross sales drop, the company’s automotive gross margin excluding regulatory credit got here in at 17.9%, up from 13.6% a yr earlier and properly above expectations of about 14.3%, in accordance to Visible Alpha.
Its power era and storage business has confirmed a notable shiny spot, benefiting from sustained demand for grid-scale batteries used to assist renewable energy and stabilize electrical energy networks.
Revenue from the power era and storage phase rose 25.5% to a file $3.84 billion in the December quarter, trouncing analysts’ estimates of $3.46 billion.
Production plans for its Cybercab robotaxi had been on monitor for this yr. ZUMAPRESS.com
‘Scorching hot AI boom’
Investors have more and more targeted on Musk’s push into self-driving technology and robotics, with many in search of proof that the autonomy story is transferring from promise to product.
An investment by Tesla in xAI was long anticipated. Analysts have mentioned Tesla will benefit from xAI’s superior fashions and growing valuation.
“With Tesla’s legacy EV business slowing, Tesla investors can take part in the scorching hot AI boom,” mentioned Andrew Rocco, a stock strategist at Zacks Investment Research.
Investors have additionally been in search of indicators that Tesla’s Full Self-Driving (FSD) and robotaxi rollouts are advancing, together with updates on regulatory progress and clearer timelines for the purpose-built Cybercab, which is designed with out a steering wheel or pedals.
An investment by Tesla in xAI was long anticipated. Analysts have mentioned Tesla will benefit from xAI’s superior fashions and growing valuation. REUTERS
Cybercabs might be added to its robotaxi service that at the moment depends on Model Y automobiles working a model of Full Self-Driving and also will be obtainable for shoppers to buy.
Last week, Musk mentioned initial manufacturing of the Cybercab robotaxi and the humanoid robot Optimus can be “agonizingly slow” earlier than accelerating over time, leaving buyers ready for a more detailed timeline and manufacturing forecast.
There are additionally regulatory hurdles concerned with producing the Cybercab, which Musk has mentioned can have no steering wheel or pedals. Current federal guidelines permit firms to produce solely 2,500 automobiles yearly that deviate from federal vehicle design requirements requiring such options. Last yr, the US Transportation Department mentioned it will be “streamlining” the exemption course of, however 2,500 remains to be the cap.
Tesla’s income fell about 3% to roughly $94.83 billion in 2025, marking the company’s first annual decline in income. Christopher Sadowski
Some laws being thought of in Congress might raise that cap.
Musk has repeatedly set bold timelines for robotaxis – saying they’d attain half of the US population by the tip of 2025 – earlier than later narrowing that aim to deployment in the highest eight to 10 metropolitan areas. The company has since missed these targets and offered no up to date timelines.
He has continued to predict speedy progress for Full Self-Driving, a imaginative and prescient he has outlined for practically a decade, however has not offered firm dates for regulatory approval or broad unsupervised deployment.
Still, Tesla’s shares rose about 11% in 2025. An $878 billion pay bundle for Musk, pegged to a collection of lofty operational and valuation milestones, reassured buyers of his dedication to Tesla amongst his different business and political pursuits.
