Tesla Revenue Falls as Company Shifts to AI and Robotics

Tesla has reported its first annual drop in revenue, marking a turning point for the electric vehicle maker as it shifts its focus away from cars and toward artificial intelligence and robotics.

The company, led by billionaire Elon Musk, said total revenues fell by three percent in 2025. Profits also dropped sharply, declining by 61 percent in the final three months of the year.

Alongside the financial results, Tesla announced it will end production of its Model S and Model X vehicles. The California factory that previously manufactured those models will now be repurposed to produce Tesla’s humanoid robots, known as Optimus.

The move comes amid growing competition in the global EV market. In January, China’s BYD overtook Tesla to become the world’s largest electric vehicle manufacturer, underlining the pressure facing the US firm.

Tesla’s changing business strategy has unfolded as Musk’s political involvement, both in the United States and internationally, has drawn controversy. Analysts say the combination of falling vehicle revenues, rising competition and a strategic pivot toward emerging technologies marks a significant moment in the company’s history.