The Elon Musk-owned electric car brand is shifting focus to self-driving vehicles, AI and robotics as automotive sales fall.
The Elon Musk-owned electric car brand is shifting focus to self-driving vehicles, AI and robotics as automotive sales fall.
Tesla is shifting focus from electric cars to AI despite experiencing its first fall in annual revenue, with CEO Elon Musk telling investors “the future is autonomous”.
While the US carmaker exceeded expectations, with Q4 revenue coming in at $24.9bn (£18.4bn), Tesla’s annual revenue for 2025 fell 3% to $94.8bn (£68.7bn).
The brand is planning to wind down production of both the Model X and Model S, switching factory space to the production of Tesla’s upcoming Optimus robots. The long-term goal is to produce 1 million units a year of Optimus robots in the current SX space in Fremont, California. The business is also poised to invest $2bn (£1.45bn) in Musk’s artificial intelligence division xAI.
Amid the shift away from its core electric vehicle business, Tesla is focusing on full self-driving vehicles with the planned release of the Cybercab in April.
“Transportation, as we know, is changing, and I think we cannot keep applying the same framework from a car sales model to the future,” CFO Vaibhav Taneja told investors yesterday (28 January).
“So it has to be looked at it more holistically. Autonomy software will be the driver for growth from now on.”
Tesla’s energy segment achieved record gross profit, contributing to a 26.6% year-on-year growth in energy revenue totally $12.8bn (£9.28bn).
However, sales in the automotive division fell 11% compared to Q4 last year. Production of both the Model 3 and the Model Y were down 3%, while the production of all other models fell by 48%.
Despite the revenue drop and pivot towards robotics and AI, Tesla is showing signs of improving brand health. YouGov data shows the brand’s index score – which averages impression, value, quality, reputation, satisfaction and recommendation – has improved from a low of -23.8 in April 2025 to -11.6 at the start of this year. However, this remains below its score of -5.9 in January 2025.
Brand consideration has remained broadly stable over the past 12 months, with 4.3% of the population saying they would consider purchasing a Tesla, according to the latest YouGov data.
Meanwhile, quality perceptions have improved more markedly, rising from -14.1 in April last year to -1 in January, although this is still below the peak of 4.1 recorded in January 2025.