Tesla is accelerating a pivot away from traditional car manufacturing and toward artificial intelligence, robotics, and chip production, even as revenue from its core auto business continues to slide, CNBC reported.
At its Fremont, California, factory, Tesla plans to stop producing some of its older vehicles and convert the plant to build humanoid robots.
The shift comes as the company prepares to spend roughly $20 billion this year on what it sees as a fundamental business transformation.
"Forget the Tesla you knew," analysts at Canaccord Genuity wrote after Tesla's fourth-quarter earnings report. "The Tesla of yesterday is gone. We believe Elon Musk has reached a definitive 'burn the ships' inflection point — a total commitment to a vision that leaves no room for retreat."
The firm recommends buying Tesla stock.
After capital expenditures fell 24% last year to $8.6 billion, Tesla said spending will more than double in 2026 as it moves further away from electric vehicles and deeper into artificial intelligence.
The company is prioritizing driverless technology, humanoid robots, and eventually, the chips needed to power those systems.
Automotive revenue — still about 70% of Tesla's business — fell 10% in 2025. The company failed to introduce new EV models and faced intensifying competition, particularly from China's BYD and the European automakers Volkswagen and BMW.
Overall revenue declined for the first time in Tesla's history.
On the earnings call, CEO Elon Musk confirmed Tesla will end production of the Model S sedan and Model X SUVs. While those vehicles represented less than 3% of deliveries last year, they helped make electric vehicles mainstream.
Analysts at Barclays said the end of the Model S and X "marks the symbolic baton pass" into "physical AI," concluding: "It's more than abundantly clear now that Tesla is not an auto company."
Musk said the Fremont production lines will instead be used to manufacture Tesla's Optimus humanoid robots. Tesla has promoted Optimus as a bipedal robot capable of performing tasks as varied as factory work, surgery, and babysitting.
Musk has previously said Optimus could make Tesla a $25 trillion company and that robots could eventually represent 80% of Tesla's value.
Tesla did not break out how much of the $20 billion in spending will go toward Optimus. Chief Financial Officer Vaibhav Taneja said the funds will support initiatives at six factories, including battery storage refining, the driverless Cybercab, the Semi electric truck, and the Optimus factory.
Musk said Tesla plans to eventually produce up to 1 million Optimus units annually but cautioned the project is in the early stages.
"We're still very much at the early stages of Optimus," he said, adding, "We wouldn't expect to have any kind of significant Optimus production volume until probably end of this year."
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