Tesla said on Wednesday that it will invest $2 billion in CEO Elon Musk’s artificial intelligence venture, xAI, while reaffirming that production of its Cybercab robotaxi remains scheduled to begin later this year. The announcement bolsters Musk’s strategy to reposition Tesla from a traditional electric-vehicle manufacturer into an AI-focused company—an ambition that underpins much of its roughly $1.5 trillion valuation. Reassurance on Cybercab timelines was especially important for investors, given Tesla’s history of missing targets set by Musk.

However, Musk’s broader vision—including Cybercabs, humanoid robots, Semi trucks, and the Roadster—will require substantial factory spending. Chief Financial Officer Vaibhav Taneja said capital expenditures will exceed $20 billion this year, more than double the $8.5 billion spent in 2025. Tesla shares initially jumped about 3.5% in after-hours trading before trimming gains to around 1.8% following the capex disclosure.

Analysts say Tesla is entering a transition period in which investors are being asked to back future revenue from self-driving software and robotaxis before vehicle sales rebound. According to Investing.com analyst Thomas Monteiro, rollout progress—rather than car deliveries—will now be the key metric to watch.

Musk said he expects fully autonomous vehicles to be operating in 25% to 50% of the U.S. by year-end, though Tesla has previously scaled back similar projections and missed earlier rollout goals. Currently, its robotaxi service remains limited, including a small deployment in Austin, Texas. Tesla’s core EV business continues to face pressure from cheaper competitors, the end of U.S. tax incentives, and some customer backlash tied to Musk’s political statements. The company also announced it will discontinue Model S and Model X vehicles, freeing factory space for robot production.

Revenue fell about 3% in 2025 to roughly $94.83 billion, marking Tesla’s first annual revenue decline. While vehicle sales have softened, margins improved, and the energy generation and storage segment stood out as a bright spot, posting record quarterly revenue driven by strong demand for grid-scale batteries.

Investor attention remains focused on Tesla’s autonomy and robotics push, with expectations that xAI’s technology will strengthen Tesla’s AI capabilities. Musk also warned of potential memory-chip shortages that could constrain future growth, suggesting Tesla may need to invest in chip manufacturing to protect its supply chain. Despite ongoing regulatory hurdles and slow initial production expectations for Cybercab and the Optimus robot, Tesla shares still rose about 11% in 2025. A massive performance-linked pay package for Musk has further reassured investors of his long-term commitment to the company.