Tesla is planning to invest $20 billion this year as it pivots from traditional EVs toward AI, autonomous vehicles, and humanoid robots.
The shifting focus
also reflect in production priorities.
Tesla will halt the Model S sedan and Model X SUV lines, which have lower sales compared with the mass-market Model 3 and Model Y, Bloomberg reported. The Fremont, California, plant that currently builds these vehicles will be retooled to produce Optimus humanoid robots.
At the same time, the company plans to scale overall vehicle output, upgrade factories, expand AI infrastructure, and accelerate production of both Optimus robots and self-driving Robotaxi vehicles.
Tesla is also investing around $2 billion into Elon Musk’s xAI, signaling a stronger commitment to AI despite a failed shareholder vote last year. The move comes with a “framework agreement” linking the two companies more closely, including Tesla integrating AI products like xAI’s Grok chatbot and supplying xAI with Megapacks.
Musk sees AI as essential for Tesla’s robotics and Robotaxi ambitions which would excite investors more than earnings reports.
In 2025, Tesla’s total 2025 revenue slipped for the first time and annual sales fell for a second year. It lost the top spot as the world's top electric vehicle maker to China's BYD.
At the same time, the company's robotaxi rollout is slowly expanding with plans to bring Robotaxis to cities like Dallas, Houston, Miami, Phoenix, Orlando, and Las Vegas in the first half of 2026. Austin already saw the first unsupervised vehicles this month.
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