Despite Tesla’s quarterly finances suffering a second consecutive decline, with annual revenue slipping to US$94.8bn, CEO Elon Musk remains optimistic about the company’s future – while changing its mission from ‘Sustainable Abundance’ to ‘Amazing Abundance’.
Even after Tesla’s profits fell 61% in the last three months of 2025, Musk has announced huge capital expenditure across AI, related infrastructure and humanoid robots.
“We’re making big investments for an epic future,” he said during a Q&A call with investors held on 28 January.
The world’s richest man also announced a halt to production of the Tesla Model S and Model X at the California plant, making way for the production of Tesla’s most ambitious product: humanoid robots.
Musk’s own AI venture, xAI, is also set to receive a US$2bn investment.
Repeating his claims that robotics and AI will bring forth a future of abundance, he said Tesla was making headway in vehicle autonomy and beginning to “produce Optimus robots at scale”.
China’s BYD recently overtook Tesla as the world’s biggest EV seller. The US carmaker expects its margins to be further impacted by its transition to a fully subscription-based model for Full Self-Driving (FSD), according to Vaibhav Tanjea, CFO at Tesla.
Investments in solar power for AI
In his ambition to tap into energy production to power AI, Musk claimed the “solar opportunity is underestimated”.
He added: “We think the best way to add significant capability to the grid – lets say it is powering AI data centres – is solar and batteries on earth and solar in space.
“That’s why we are going to work towards getting 100 gigawatts a year of solar cell production integrating across the entire supply chain from raw materials all the way to finished solar panels.”
As part of this green initiative, Musk said Tesla aims to be a “significant manufacturer of solar cells” as it makes “massive investments in AI”. This, he added, would lead to increased investment in “batteries as well as the entire supply chain of batteries”.
Even after the company achieved 26.6% year-on-year growth in the energy sector, with Megapack 3 and Megablock awaiting launch, Vaibhav said the company expects “margin compression from the increased low cost competition, impacts to market from policy uncertainty and the cost of tariffs”.
Tesla Optimus launch
Set to make a big splash in the realm of humanoid robots, customers can expect the unveiling of Optimus 3 over the next few months.
Musk said Optimus would be “surprising to people” and “an incredibly capable robot”.
He continued: “Optimus really will be a general purpose robot that can learn by observing human behaviour.
“So, you can demonstrate a task or literally verbally describe a task or even show it a video and it will be able to do that task.”
New factories in the pipeline
Tesla sees 2026 as a year of major capital expenditure, with Vaibhav noting that CapEx is expected to exceed US$20bn.
“We’ll be paying for six factories, namely the refinery, LFP factory, cybercab, Semi, a new mega factory and the Optimus factory,” he notes.
“On top of it, we’ll also be spending money for building our AI compute infrastructure and we’ll continue investing in our existing factories to build more capacity and also the related infrastructure along with it and we’ll also further expand our fleet of robotaxi and Optimus.”
AI chips and fab labs as limiting factor
Musk highlighted that a possible limiting factor for Tesla’s growth in the next three to four years could be chip production.
“Completing the AI5 chip design and having it be a great chip is arguably the number-one most critical thing to get done, which is why I’m spending more time on that than currently anything else at Tesla,” he said.
Looking even further ahead, Must revealed AI6 – “yet another big leap beyond AI5” – would hopefully follow less than 12 months later.
Musk also expanded on the need to build a ‘TeraFab’ chip plant that integrates logic memory and packaging, saying: “If we don’t do that, we’re just going to be fundamentally limited by supply chain.”
He added that, in a worst-case geopolitical situation, the impact would be dire.
China emerges as Tesla’s biggest competitor
Succumbing to China’s BYD in the EV market, Musk foresees Tesla’s toughest competition in the humanoid market to emerge from beyond the Great Wall.
“I do think that by far the biggest competition for humanoid robots will be from China,” he says.
“China is incredibly good at scaling manufacturing. Actually, quite good at AI,” adding that the models being distributed for free there “keep getting better”.
Summarising, he said: “So, China’s very good at AI, very good at manufacturing and will definitely be the toughest competition for Tesla.”
