Tesla Invests $2 Billion in AI, Big Bet on Robotaxis
On Wednesday, Tesla announced that it will invest $2 billion in xAI, an artificial intelligence company owned by its CEO, Elon Musk. The company also said it plans to begin production of its Cybercab robotaxi later this year.
On Wednesday, Tesla announced that it will invest $2 billion in xAI, an artificial intelligence company owned by its CEO, Elon Musk. The company also said it plans to begin production of its Cybercab robotaxi later this year.
This news supports Musk’s plan to turn Tesla from an electric-car company into a technology- and AI-focused company. This shift is significant because it supports Tesla’s market capitalization of approximately $1.5 trillion.
Tesla plans to spend more than $20 billion this year on factories and new projects, including robotaxis, humanoid robots, Semi trucks, and Roadster car, which is more than double the $8.5 billion it spent in 2025, according to Chief Financial Officer Vaibhav Taneja.
After the announcement, Tesla's shares rose 3.5% in after-hours trading, but later fell slightly as investors noted the amount the company plans to spend, and the gains dropped to about 1.8%.
Thomas Monteiro, senior analyst at Investing.com, said Tesla is now in a transition phase and is asking investors to trust future revenue from self-driving software and robotics, even before car sales fully recover.
Elon Musk said he expects fully self-driving cars to be available in 25% to 50% of the U.S. by the end of this year. Earlier, he had promised a wider robotaxi rollout, but Tesla has missed several deadlines. Currently, Tesla operates a limited robotaxi service in Austin.
Tesla's core model is struggling. Competition has intensified as competitors are selling newer, cheaper models, and U.S. tax benefits for Electric Vehicle (EV) buyers have expired. Some customers have also reacted negatively to Musk’s political statements and preferences.
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Musk also announced that Tesla will discontinue sales of its Model S sedans and Model X SUVs. These models once made Tesla famous, but now generate very little revenue. The factories will instead be used to build robots.
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