Share Tesla’s annual revenue has fallen for the first time in its history. The electric vehicle (EV) pioneer reported a 3% decline in total revenues for 2025, while profits plummeted by 61% in the final quarter of the year. This financial downturn comes as CEO Elon Musk aggressively shifts the company’s focus away from its automotive roots toward artificial intelligence and humanoid robotics. In a landmark move, Tesla announced it will discontinue production of its Model S and Model X vehicles. The company plans to repurpose its Fremont, California, manufacturing plant to produce “Optimus,” a line of humanoid robots (pictured above). Musk has described Optimus as potentially the “biggest product of all time,” with mass production expected to begin before the end of 2026. The transition marks what Tesla describes as an evolution from a “hardware-centric business to a physical AI company.” This pivot coincides with intensifying global competition; in early 2025, China’s BYD officially overtook Tesla as the world’s largest EV manufacturer. Analysts note that Tesla is currently contending with a “dated line” of electric vehicles, while rivals offer more affordable alternatives. Musk is doubling down on this new direction with a massive $20 billion capital expenditure plan. This includes a $2 billion investment in xAI, Musk’s independent artificial intelligence venture. Interestingly, this investment is going ahead despite a shareholder vote where opposition and abstentions actually outweighed approval. The shift away from EVs also aligns with significant political changes in the US, including the rescinding of government subsidies for non-fossil fuel cars. Musk’s high-profile entry into politics has also alienated some customers, leading to protests at dealerships. However, Tesla shares rose following the earnings report, as investors remain hopeful that Musk’s “robot army” will eventually usher in a new era of growth. To secure a record-breaking pay package potentially worth $1 trillion, Musk must now prove that Tesla’s future lies not in the cars it pioneered, but in robots and AI systems he believes will one day eliminate poverty (though presumably not for the millions of workers, including taxi drivers, whose jobs will disappear). For latest tech stories go to TechDigest.tv Share this: