Tesla shifts focus to robotics and AI as investors urge return to core auto business

Tesla is betting big on a future where it builds humanoid robots and autonomous vehicles instead of just selling cars. The problem: a growing number of investors would prefer it just sell more cars.

The company’s planned capital expenditures for 2026 exceed $25 billion, nearly tripling the roughly $9 billion it spent the previous year. Much of that money is flowing into AI infrastructure, custom chip development, and the buildout of robotaxi services, all centered around Elon Musk’s vision of Tesla as a robotics and artificial intelligence company that happens to also make electric vehicles.

The great pivot

Tesla’s transformation from automaker to AI company is physically reshaping the company’s manufacturing footprint.

Production of the Model S and Model X ended in early 2026. Those factory lines are being repurposed for manufacturing the Optimus humanoid robot, Tesla’s ambitious bid to create a general-purpose robot that can perform tasks in homes and factories.

Musk now dedicates roughly half of earnings call time to discussing AI and robotics, up from about 15-20% back in 2022.

The company also invested $2 billion into Musk’s xAI venture in January 2026, a move that drew pushback from shareholders who questioned whether Tesla’s capital should be funneled into a separate Musk-controlled entity.

The numbers tell a complicated story

Tesla’s 2025 revenue came in at $94.83 billion, marking the company’s first annual revenue decline at negative 3%. That dip arrived courtesy of intensifying competition in the global EV market, where Chinese rival BYD has overtaken Tesla in total electric vehicle sales.

Analysts expect Tesla to post negative free cash flow in 2026 as a direct result of the $25 billion capital expenditure plan.

Two camps, one stock

The investor base is effectively split into two camps. One group sees Tesla’s pivot as visionary, arguing that the market for physical AI applications, from autonomous driving to humanoid robots, dwarfs the addressable market for electric vehicles. The other camp points to the revenue decline, eroding market share, and negative free cash flow projections as evidence that the company needs to shore up its automotive foundation before chasing moonshots.

Tesla’s $2 billion investment in xAI has drawn additional scrutiny. Some shareholders see it as a conflict of interest, essentially Tesla subsidizing another Musk venture. Others view it as strategic positioning in a rapidly consolidating AI landscape.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.