By Chris Isidore, NCS
(NCS) — Tesla CEO Elon Musk, who turned an upstart electrical car maker into an industry-changing powerhouse, is pulling the plug on the 2 fashions that helped get him there, as he struggles with one other quarter of declining earnings and automotive gross sales.
He introduced the top of manufacturing of two fashions – the Model S and Model X, among the many firm’s most costly fashions, on a Wednesday earnings name. Instead, the corporate will use that manufacturing unit area to build humanoid robots as a substitute.
And he appeared to recommend that promoting electrical automobiles, which Tesla helped to introduce to the worldwide mass market, would quickly be an afterthought for the corporate.
Musk predicted the Cybercab, a two-seat self-driving “robotaxi” car with no steering wheel or pedals, will finally be bought in numbers “several times more” than all Tesla’s different automobiles mixed.
But Tesla’s robotaxi service remains to be not in large operation, utilizing Tesla staff as “safety monitors” within the vehicles whereas different corporations supply true driverless rides in much more cities. Meanwhile, the corporate’s EV gross sales and earnings, which it nonetheless relies upon upon for the money to fund its bold autonomous and AI future, proceed to decline.
Tesla stated Wednesday that its adjusted earnings fell 16% over the last three months of 2025. Its internet earnings tumbled additional, plunging 61% within the quarter and 46% for the yr, or a $3.3 billion decline.
The firm posted its greatest year-over-year gross sales quantity drop ever within the fourth quarter and by far the largest drop in annual gross sales at an organization that without delay been rising at practically a 50% tempo.
Tesla’s incomes have fallen in 9 of the final 10 quarters. As of 2025, the corporate’s annual earnings is just 30% of the $12.6 billion it was in 2022, its peak earnings yr.
The model’s fame took successful final yr amongst some American and European patrons – backlash to Musk’s political actions and his shut relationship with President Donald Trump. And all US EV sales dropped off later within the yr following the elimination of a $7,500 US tax credit for EV patrons.
Tesla additionally faces elevated competitors from different automakers, significantly in China, Tesla’s second largest market behind the United States. In reality, Tesla in 2025 misplaced its title of world’s largest electrical car maker to Chinese automaker BYD.
The finish of the Model S and Model X may have a restricted affect on Tesla’s gross sales. Together they make up solely 3% of its world deliveries. Production is due to finish in some unspecified time in the future subsequent quarter.
In its earnings report, the corporate disclosed for the primary time that Tesla reached a deal to make investments $2 billion in xAI. The AI firm, which Musk owns and started in 2023, additionally owns his social media platform, X.
The promise of robotaxis and robots was sufficient to raise the inventory to a file stage in December, though it has retreated considerably since that peak.
Shares of Tesla (TSLA) rose barely in after-hours buying and selling after the corporate stated in its earnings assertion that it deliberate to broaden its robotaxi service to seven markets within the first half of this yr. That’s on high of the 2 it presently serves.
The firm beforehand stated that its robotaxi service would serve half of the US inhabitants by the top of 2025. Musk reiterated that purpose on Wednesday, saying between 1 / 4 to half of the United States may have totally autonomous automobiles by the top of 2026, “pending regulatory approval.”
The story has been up to date with further particulars.
The-NCS-Wire
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