TLDR
- Tesla finalizes $2 billion investment in Elon Musk’s xAI artificial intelligence company via Series E Preferred Stock purchase
- Model S and Model X production ending to free factory space for Optimus humanoid robot manufacturing
- Energy storage division posted record $3.84 billion Q4 revenue, crushing analyst estimates by 11%
- Capital expenditures jumping to $20 billion-plus in 2026 from $8.5 billion spent in 2025
- Cybercab robotaxi production schedule unchanged for 2026 rollout despite past delays
Tesla completed a $2 billion investment in xAI, the artificial intelligence startup controlled by CEO Elon Musk. The agreement closed January 16, 2026, with Tesla acquiring xAI Series E Preferred Stock.
Tesla, Inc., TSLA
The investment creates formal ties between two Musk enterprises. Tesla gains access to xAI’s advanced AI technology while xAI benefits from Tesla’s computational resources and vehicle data. The companies plan ongoing AI collaboration.
Tesla’s transition from pure electric vehicle maker to AI company drives its $1.5 trillion market value. Investors want proof this strategy delivers results beyond traditional car sales.
The automaker maintained its Cybercab robotaxi production schedule for 2026. Musk said fully autonomous vehicles should operate in 25% to 50% of U.S. states by December.
Previous robotaxi predictions haven’t materialized. Musk initially projected service reaching half the U.S. population by end of 2025. He later revised that to eight to ten major cities. Tesla currently runs limited robotaxi operations only in Austin, Texas.
Legacy Vehicles Getting Axed
Tesla will stop making Model S sedans and Model X SUVs. These premium vehicles helped build Tesla’s brand but now represent a tiny revenue slice. The factory lines will produce Optimus humanoid robots instead.
This production shift reflects changing priorities. Tesla wants investors betting on autonomous driving software and robotaxi income rather than traditional vehicle sales.
Revenue fell 3% to $94.83 billion in 2025, marking Tesla’s first annual decline. The automotive business faces pressure from rivals launching competitive models at lower price points. The federal EV tax credit disappeared. Musk’s political activities have alienated certain customer groups.
Tesla defended market share through discounting and introducing cheaper trim levels. Analysts forecast 1.77 million deliveries in 2026, up 8.2% from 2025.
Fourth-quarter adjusted earnings reached 50 cents per share, beating the 45-cent Wall Street consensus. Net income plunged 61% to $840 million.
Margins Improve Despite Headwinds
Automotive gross margin excluding regulatory credits hit 17.9%, up from 13.6% one year earlier. This beat analyst expectations of 14.3%. The margin expansion occurred despite falling revenue and heavy discounting.
Energy storage emerged as a growth driver. The segment generated $3.84 billion in Q4, up 25.5% year-over-year. This exceeded analyst projections of $3.46 billion. Utilities purchasing grid-scale batteries for renewable energy support fueled demand.
CFO Vaibhav Taneja said capital spending will exceed $20 billion in 2026. That’s more than double the $8.5 billion invested during 2025. Funds will support Cybercab production, humanoid robots, Semi trucks, and Roadster sports cars.
Shares rose 3.5% after-hours before pulling back to 1.8% gains after spending details emerged.
Musk warned about potential memory chip shortages hampering Tesla’s plans. He floated building a chip fabrication facility. AI infrastructure buildout by tech companies consumed available chip supply, pushing prices higher.
Optimus robot volume production won’t arrive until late 2026. Initial Cybercab and Optimus manufacturing will ramp slowly.
The Cybercab design lacks steering wheels and pedals, conflicting with current federal safety standards. Musk hasn’t provided specific dates for regulatory approval or widespread unsupervised Full Self-Driving deployment.
Musk’s $878 billion pay package, tied to performance milestones, reinforced his commitment to Tesla among other business interests. Tesla stock gained 11% in 2025.
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Source: https://blockonomi.com/tesla-tsla-stock-musk-links-xai-and-tesla-with-2-billion-ai-power-play/