Tesla To Convert Fremont Car Factory Into It's Optimus Robot Factory

Tesla Fremont Factory on January 29, 2026, in San Rafael, California (Justin Sullivan/Getty Images)

The economics of Tesla the company are still all about cars. The economics of Tesla the stock are not.

The company is ditching some of its EV models as it doubles down on robots, AI, energy, and self-driving.

1/30/26 7:39AM

For years, Elon Musk has insisted Tesla isn’t really a carmaker. Slowly but surely, that statement is getting more accurate.

On Wednesday, the Texas-based company posted its first-ever annual revenue decline, with 2025 revenue falling 3% to $94.8 billion. Behind the drop was a 10% dip in automotive revenue, as weaker EV demand pushed vehicle deliveries and average selling prices lower.

What helped cushion a bigger blow was Tesla’s Energy Generation and Storage segment, which sells solar gear and large batteries used to generate and store electricity for homes, EVs, businesses, and the power grid.

The economics of Tesla [FY2025] — Sherwood news

A fast-growing part of Tesla, the Energy segment generated nearly $13 billion in revenue last year, up 27% from 2024, and now accounts for around 13% of the company’s total — more than double its share from just two years ago.

Still, Automotive makes up nearly three-quarters (73%) of Tesla’s business. And Musk would like that share to be replaced by sales from robots. On Wednesday, Musk said Tesla will wind down production of its two priciest EV models next quarter, converting that factory space to produce Optimus, its humanoid robot — though it won’t be commercially available until late 2027.

Meanwhile, Tesla’s Robotaxi service — launched last year in Austin and the Bay Area — is set to expand to additional cities and ultimately be supported by Cybercabs. Musk also hopes that selling its Full Self-Driving software to Tesla car owners, a product that’s becoming subscription-only, will boost its fortunes further. Reports even surfaced this week that Musk’s rocket company, SpaceX, is actually considering a merger with Tesla or xAI.

All of this reinvention, of course, comes at a cost. Tesla’s operating income fell 38% from a year earlier, and the company’s capital expenditure is set to soar this year — joining a raft of other tech companies that are splurging like never before. Still, Tesla’s $20 billion capex bill for 2026 looks positively cheap compared to Meta’s: the Instagram owner could spend as much as $135 billion on capex this year.

$35.4B

Max Knoblauch6h

The tariffs imposed by the Trump administration have cost automakers at least $35.4 billion since the start of 2025, according to a new analysis by Automotive News.

That total will continue to climb this year, since the Supreme Court’s February tariff ruling largely leaves the 25% levy on vehicles and auto parts untouched.

Toyota has taken the biggest hit, projecting more than $9 billion in tariff costs in its fiscal year ending this month, while Detroit’s big three automakers — Ford, GM, and Stellantis — were hit with a combined $6.5 billion tariff charge in 2025.

In the fourth quarter, automakers sold about 8% fewer imported vehicles in the US compared to the same period a year ago, per the Automotive News Research & Data Center.

Tariff charges come at a rough time for legacy carmakers, which are also scaling back EV plans following the Trump administration’s elimination of tax credits and fuel standard goals. According to Automotive News, the cost of EV write-downs and restructuring is, so far, nearly $70 billion.

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Tesla Will Open Up Its Chargers To Other Brands, In Order To Receive Federal Subsidies

After a big pullback for EVs, climbing gas prices are causing drivers to eye them again

Still, the market is much different than it was the last time oil prices were this high.

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McDonald’s plans $3 menu items as fast food loses its price edge

Americans are spending more of their dining-out dollars at full-service restaurants again.

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How Tesla quietly wound up owning a small piece of SpaceX

Tesla is converting its recent $2 billion investment in Elon Musk’s AI company, xAI, into a small ownership stake in SpaceX — just months before the rocket maker’s highly anticipated IPO.

Here’s what happened: Tesla announced its xAI investment in late January, after a shareholder proposal to invest fell short last year. Several days later, xAI merged with SpaceX. All three companies are headed by Musk.

Now, regulatory filings with the Federal Trade Commission show Tesla converting that investment into a small stake in SpaceX, formalizing the financial link between the companies ahead of the rocket maker’s IPO. SpaceX is expected to go public this year at a valuation some speculate could top $1.75 trillion, potentially making it the biggest company to ever go public. (The current record holder, Saudi Aramco, went public at a more than $1.7 trillion valuation in 2020.)

While the size of Tesla’s stake wasn’t available, Bloomberg reports that the investment would equate to ownership of less than 1%.

While SpaceX and Tesla have engaged in related-party transactions over the years, Tesla had not previously disclosed an equity investment in SpaceX.

Tesla Converts xAI Investment Into SpaceX Stake Ahead of IPO