LOS ANGELES, Jan 29, 2026, 05:16 PST
- Tesla is set to invest over $20 billion in capital expenditures in 2026, more than twice what it spent last year.
- Musk announced that production of the Model S and Model X will be phased out as the company pivots to focus on robotaxis and humanoid robots.
- Tesla announced a $2 billion investment in Musk’s AI startup xAI, doubling down on its push toward autonomy.
Tesla is set to ramp up capital spending to over $20 billion in 2026, more than twice last year’s outlay, as Elon Musk pushes beyond human-driven vehicles toward robotaxis and humanoid robots. This move follows Tesla losing the global EV sales crown to China’s BYD last year. Musk announced Tesla will halt production of the Model S sedan and Model X SUV, repurposing its California factory space to build Optimus robots. CFO Vaibhav Taneja added that a large chunk of the spending will fund the steering-wheel-free Cybercab, semi-trucks, battery factories, and lithium production. REX Financial COO Scott Acheychek called it “the bigger story” of a business model shift. Musk described 2026 as “a very big capex year” with “big investments for an epic future.” (Reuters)
The spending plan matters because Tesla is fighting to justify a valuation that towers over most automakers, even as its main EV business encounters stiffer competition. Capex — shorthand for capital expenditures — represents cash poured into long-term assets like factories and production equipment, and it can quickly erode free cash flow.
During the investor call, Musk informed shareholders it was “time to basically bring the Model S and X programs to an end,” noting Tesla plans to halt production next quarter. The Fremont, California factory that manufactures those models will be repurposed to build Optimus, he added. (The Guardian)
Tesla’s latest quarterly report revealed $24.9 billion in revenue for Q4, a 3% drop from the same period last year. For the full year 2025, revenue also declined 3%, landing at $94.8 billion. Net income attributable to common shareholders plunged 61% to $840 million under U.S. GAAP, while non-GAAP earnings per share came in at 50 cents. On the upside, energy generation and storage revenue jumped 25% to hit a new high of $3.84 billion. Tesla closed the year sitting on roughly $44.1 billion in cash and investments. (Tesla Assets)
This move doubles down on Tesla’s wager that autonomy and robotics will evolve into genuine businesses, not just investor talking points on earnings calls. It also redirects factory capacity and leadership attention away from low-volume legacy models, focusing instead on products grappling with fundamental issues like cost, safety, and adoption.
Tesla announced a $2 billion investment in Elon Musk’s AI startup, xAI, while confirming that production of the Cybercab robotaxi remains on schedule for this year. The company also flagged capital expenditures exceeding $20 billion. According to Investing.com analyst Thomas Monteiro, Tesla is “entering a transition phase,” emphasizing that rollout metrics—not delivery numbers—are now the key indicators to watch. Musk also sounded alarms about an impending memory chip shortage that could disrupt Tesla’s plans. He suggested the company should consider building its own chip factory, warning: “If we don’t do that, we’re just going to be fundamentally limited by supply chain,” and added that “in a worst-case geopolitical situation it would be quite a severe situation.” (Reuters)
Tesla’s latest materials reveal a sharp focus on linking short-term results to its software strategy. Full Self-Driving subscriptions reached roughly 1.1 million by the close of 2025, though the system still needs driver oversight and doesn’t deliver full autonomy. The company also noted it started removing the safety monitor from its Austin robotaxi service in January. Plus, Tesla outlined plans to ramp up six new production lines across vehicles, robots, energy storage, and battery manufacturing. (Investors)
Yet the shift hits the usual snags: regulators, supply chains, and winning over consumers. After a record-breaking spending spree, there’s little margin for error if EV demand falters or if new models don’t ramp up production on schedule.
Tesla’s car sales still drive most of its revenue, despite competitors launching fresh models and undercutting prices. Now, the company wants investors to see it less as a traditional automaker and more as an industrial AI firm that just happens to sell vehicles.
