Musk’s $20 billion spending plan signals ‘Tesla of yesterday is gone’
On: Tesla’s The automaker, which operates from its factory in Fremont, California, plans to make robots to replace its old cars as it prepares to spend $20 billion this year to finance what it sees as a business transformation.
“Forget the Tesla you know,” analysts at Canaccord Genuity wrote in a note following Tesla’s fourth-quarter earnings report. “Yesterday’s Tesla is gone. We believe Elon Musk has reached a definitive ‘burning the boats’ milestone; a complete commitment to a vision that leaves no room for retreat.” Analysts recommend buying the stock.
After capital spending fell 24% last year to $8.6 billion, Tesla said on Wednesday that figure will more than double by 2026 as the company shifts its business away from electric vehicles and toward artificial intelligence, focusing on driverless technology, humanoid robots and, eventually, chips that support those long-promised goals.
Tesla shares closed down 3.5% at $417.89, bringing January’s decline to more than 7%.
Automotive revenue, which still accounts for about 70% of Tesla’s business, is down 10% in 2025 as the company fails to introduce new EV models and faces increasing competition worldwide, primarily from China’s BYD and Volkswagen and BMW in Europe. Tesla’s total revenue dropped to a record low for the first time last year.
In the earnings call following the report, Musk said the company was ending production of the Model S sedan and Model X SUV; In total, these accounted for less than 3% of the company’s delivery volume last year, but they helped Tesla bring electric vehicles into the mainstream.
Musk said that the lines producing these models in Fremont will be converted into a factory producing Optimus robots, which have not yet been released. The company touted Optimus as an intelligent bipedal robot that could one day do everything from factory work to surgeries to babysitting. He admitted that Optimus is still not used “in a material sense” in Tesla factories.
By 2024, Musk has said Optimus could eventually turn Tesla into a $25 trillion company (today’s market cap is $1.4 trillion), and he said last year that 80% of Tesla’s value will eventually come from robots.
Tesla did not specify in this week’s earnings call how much of this year’s $20 billion in capex will be devoted to Optimus. CFO Vaibhav Taneja said the money will be plowed into initiatives at six factories, including the development of a driverless Cybercab, Semi-electric truck and Optimus factory, along with a refinery for battery storage.
“On top of that, we will also spend money on building out our AI computing infrastructure and will continue to invest in our existing factories to build more capacity and then the associated infrastructure along with that,” Taneja said.
‘Early stages of Optimus’
While Musk said that the company plans to commission a production line for Optimus that can produce one million units per year, he acknowledged that “we are still in the early stages of Optimus” and described it as a research and development project.
“We don’t expect to have significant Optimus production volume until probably the end of this year,” said Musk, who is famous for missing self-imposed deadlines.
In addition to its pursuit of Optimus, Tesla plans to expand its Robotaxi ride-hailing fleet in the US and is still working to fulfill its decade-old promise to deliver an autonomous driving system that makes its cars safe without the need for a human driver ready to steer or brake at any time.
Tesla launched a ride-hailing app branded Robotaxi in 2025 and is running a pilot service in Austin, Texas. Last week, Tesla executives said they were enlisting human safety auditors from a handful of cars in its Austin fleet to conduct driverless passenger rides. The company also began offering service with a driver behind the wheel in the San Francisco area last year.
The company told an investor deck on Wednesday that it plans to expand into seven more U.S. markets in the first half of this year. These cities are Dallas, Houston, Phoenix, Miami, Orlando, Tampa and Las Vegas.
A Tesla Optimus robot distributes candy outside the Nasdaq MarketSite in New York, United States, on Monday, October 27, 2025.
Michael Nagle | Bloomberg | Getty Images
In addition to all the technical challenges and financial commitments associated with robots and self-driving cars, Tesla faces serious competition in both areas. alphabet Waymo is rapidly expanding its robotaxi service in the US. Baidu’s Apollo Go is growing in China. In robots, Apptronik and Boston Dynamics are among the US players, as well as companies such as Unitree and Agibot in China.
Another area where Musk said the company expects to spend big is chips. Important suppliers such as Samsung, Taiwan Semiconductor Manufacturing Inc. And Micron There’s no way they can produce enough hardware to meet Tesla’s needs.
“To eliminate the constraint, the possible constraint, in three or four years, we will need to build the Tesla TeraFab, a very large factory domestically that includes logic, memory and packaging,” Musk said. “And that will actually be very important to ensure that we are protected against any geopolitical risks.”
“We’ll be paranoid and make sure we can keep making batteries, robots, and AI chips no matter what.”
This year’s spending target does not include any TeraFab plans, Taneja said. This also doesn’t explain Musk’s vision of starting solar cell production in the US
While cars are still the company’s core business, the end of the Model S and
“Although it wasn’t clear before, it is now abundantly clear that Tesla is not a car company,” the analysts wrote.
WRISTWATCH: Why is Elon Musk moving Tesla away from cars?
