Tesla Shifts Focus to Robots and Robotaxis as EV Sales Decline

Elon Musk announces plans to end production of Model S and X, double capital expenditures in 2026

Feb. 1, 2026 at 11:31am

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Tesla CEO Elon Musk has been trying to position the company as more than just an electric vehicle maker, pushing the idea of Tesla as an AI and robotics company. However, the bulk of Tesla's revenue still comes from selling and leasing EVs. As EV sales have dipped, Tesla's profits in 2025 were 46% lower year-over-year. To compensate, Tesla plans to fill the production void left by the Model S and X with its Optimus humanoid robots and scale its robotaxi operations to more cities in 2026.

Why it matters

Tesla's shift away from its core EV business highlights the challenges the company faces as it tries to diversify beyond its roots. The move to focus more on robots and robotaxis signals Tesla's ambition to become a broader technology company, but it remains to be seen if these new ventures can make up for the decline in EV sales.

The details

Tesla generated $94.8 billion in revenue in 2025, with $69.5 billion coming from selling and leasing EVs and related regulatory credits. The remaining $25 billion was split nearly evenly between its energy generation (solar) and storage business and 'services and other,' which include revenue from its Superchargers, parts sales, and Full Self-Driving subscriptions. To compensate for the decline in EV sales, Tesla plans to end production of the Model S and Model X and instead focus on producing its Optimus humanoid robots at its Fremont factory. Musk also intends to scale Tesla's robotaxi operations to more cities in 2026 and even floated the need for Tesla to build a TerraFab factory to shore up chip supply.

  • Tesla generated $94.8 billion in revenue in 2025.
  • Tesla's profits in 2025 were 46% lower year-over-year.

The players

Elon Musk

The CEO of Tesla who has been trying to position the company as more than just an electric vehicle maker.

Tesla

An American electric vehicle and clean energy company that is a subsidiary of Alphabet Inc., Google's parent company.

Optimus

Tesla's humanoid robot that will be produced at the company's Fremont, California factory.

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What they’re saying

“2026 would be a huge CapEx year, more than doubling spending to $20 billion, which would put them in negative-cash-flow territory.”

— Elon Musk, CEO, Tesla (TechCrunch)

What’s next

Tesla plans to scale its robotaxi operations to more cities in 2026 and is considering building a TerraFab factory to shore up chip supply.

The takeaway

Tesla's shift away from its core EV business and towards robots and robotaxis highlights the company's ambition to become a broader technology player, but it remains to be seen if these new ventures can make up for the decline in EV sales.