ISTANBUL

Tesla reported its first annual revenue drop as it pivots away from electric vehicles toward artificial intelligence and robotics.

The Elon Musk–led company said total revenue fell by 3% in 2025, while profits plunged 61% in the final quarter of the year.

Tesla also revealed it will discontinue production of its Model S and Model X vehicles, repurposing the California factory that built them to manufacture its humanoid robots, known as Optimus.

In January, China’s BYD surpassed Tesla to become the world’s largest electric vehicle manufacturer, as Musk’s growing political involvement in the US and overseas sparked controversy.

Tesla also disclosed a $2 billion investment in Musk’s artificial intelligence venture, xAI.

“A lot of investors asked us to do this,” Musk said of Tesla’s involvement in xAI’s latest funding round. “They say we should invest in xAI, so we’re just doing what shareholders asked us to do, pretty much.”

The decision was made despite the outcome of a recent shareholder vote on whether Tesla should invest in xAI, in which abstentions and opposing votes outweighed those in favor.

The company has also been accelerating its push into robotaxi services.

Analysts say the company’s move toward newer ventures comes as it grapples with an aging electric vehicle lineup.

“The Model S and Model X have been low-volume vehicles for Tesla for a while now,” Jessica Caldwell, head of Insights at Edmunds, told the BBC.

“From a portfolio and focus standpoint, it makes sense to drop them and concentrate on higher-volume products like the Model 3 and Model Y, along with other business expansion bets,” Caldwell added.