Elon Musks Tesla to invest $2B in xAI as EV makers income, profit slump | Latest Tech News
Tesla said 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 have been on observe for this 12 months.
The news supported Musk’s plan to pivot Tesla from an electric vehicle maker to an AI company, which is key to the company’s roughly $1.5 trillion valuation. Shares rose 3.8% even though some analysts and traders have been skeptical that the CEO would hit his own manufacturing launch targets, based on earlier misses.
Tesla is “entering a transition phase” where it’s asking traders to underwrite potential income from self-driving software program in its automobiles and robotaxi business before auto gross sales get well, said Thomas Monteiro, senior analyst at Investing.com.
Tesla said Wednesday it had agreed to invest about $2 billion in Elon Musk’s artificial intelligence startup xAI, as Tesla reported decrease gross sales and profit. GIAN EHRENZELLER/EPA/Shutterstock
“(That) makes rollout metrics – not deliveries – the most important leading indicator from here,” Monteiro said.
Tesla’s core EV business, which still accounts for most of the company’s current income, has been under pressure as rivals roll out newer fashions, often at decrease costs. A US tax incentive for electric automobiles has also ended, and Musk’s far-right political rhetoric has alienated some prospects.
Tesla’s core EV business, which still accounts for most of the company’s current income, has been under pressure as rivals roll out newer fashions, often at decrease costs. A US tax incentive for electric automobiles has also ended, and Musk’s far-right political rhetoric has alienated some prospects.
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, according to Visible Alpha data.
Investors have more and more centered 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, according to LSEG data.
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 12 months earlier and nicely above expectations of about 14.3%, according to Visible Alpha.
Its vitality era and storage business has confirmed a notable shiny spot, benefiting from sustained demand for grid-scale batteries used to help renewable energy and stabilize electrical energy networks.
Revenue from the vitality era and storage section rose 25.5% to a document $3.84 billion in the December quarter, trouncing analysts’ estimates of $3.46 billion.
Production plans for its Cybercab robotaxi have been on observe for this 12 months. ZUMAPRESS.com
‘Scorching hot AI boom’
Investors have more and more centered on Musk’s push into self-driving technology and robotics, with many wanting for proof that the autonomy story is shifting from promise to product.
An investment by Tesla in xAI was long anticipated. Analysts have said 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,” said Andrew Rocco, a stock strategist at Zacks Investment Research.
Investors have also been wanting for indicators that Tesla’s Full Self-Driving (FSD) and robotaxi rollouts are advancing, including updates on regulatory progress and clearer timelines for the purpose-built Cybercab, which is designed without a steering wheel or pedals.
An investment by Tesla in xAI was long anticipated. Analysts have said Tesla will benefit from xAI’s superior fashions and growing valuation. REUTERS
Cybercabs will likely be added to its robotaxi service that at the moment depends on Model Y automobiles working a model of Full Self-Driving and will also be out there for customers to buy.
Last week, Musk said initial manufacturing of the Cybercab robotaxi and the humanoid robot Optimus can be “agonizingly slow” before accelerating over time, leaving traders ready for a more detailed timeline and manufacturing forecast.
There are also regulatory hurdles concerned with producing the Cybercab, which Musk has said can have no steering wheel or pedals. Current federal guidelines permit firms to produce only 2,500 automobiles yearly that deviate from federal vehicle design requirements requiring such options. Last 12 months, the US Transportation Department said it will be “streamlining” the exemption course of, but 2,500 is still 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-about 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 end of 2025 – before later narrowing that purpose to deployment in the top eight to 10 metropolitan areas. The company has since missed those targets and offered no up to date timelines.
He has continued to predict fast progress for Full Self-Driving, a imaginative and prescient he has outlined for practically a decade, but 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 package deal for Musk, pegged to a collection of lofty operational and valuation milestones, reassured traders of his dedication to Tesla among his other business and political pursuits.
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