The moves, surprising even in the context of Musk’s no-holds-barred management style, highlight the deep transformation the automaker has undergone as it loses the EV market to Chinese rivals. Instead of discontinued car models, Musk said Tesla will use the freed-up factory space to build Optimus robots, a more experimental line of humanoid robots that Musk says will eventually do everything from housework to surgery.

Tesla executives emphasized that the investment in xAI will build efficiencies for Tesla, as it does not need to spend the same AI resources, and Musk said that it will ultimately help Tesla manage a large fleet of autonomous cars and Optimus robots.

“We’re just doing what the shareholders are asking us to do, pretty much,” Musk said on Wednesday night’s call, noting that “many” of the investors had asked for an investment in xAI.

Tesla shares rose about 1.8% in after-hours trading on Wednesday following the results.

Revenue fell 3% year-over-year in the fourth quarter, which some analysts cited as slowing EV sales due to the end of federal tax credits. However, Tesla beat Wall Street targets, posting $24.9 billion in revenue versus the $24.8 billion estimate.

Musk emphasized that Tesla has changed its mission to “build a world of extraordinary abundance,” from “accelerating the world’s transition to sustainable energy,” and talked about how AI is the most likely path to help all people get “universal high incomes” and better medical care. The language used in the call, which includes reference to a hypothetical rare refinery on the ground, that “we desperately need in America” ​​was explained during the time he spent with President Trump last year.

Tesla has been moving away from its roots as a carmaker recently, in favor of autonomous software and robotics. “It’s time to basically put the Model S and X programs into an honorable retirement, because we’re moving into a future based on autonomy,” Musk said.

Musk said Tesla operates 500 robotaxis across Austin and San Francisco, and he said it is conducting “randomly selected paid rides” without a safety driver in Austin, although it is unclear at this time how many unsupervised rides are taking place. For the first time, Tesla shared this quarter how many of its customers have purchased Full Self Driving (FSD) software. There will be 1.1 million subscriptions in 2025, up from 800,000 in 2024.

Musk has been making promises of autonomy for more than a decade, although he is far behind his timelines and the company has yet to generate much profit from its business line. On Wednesday’s earnings call, CFO Vaibhav Taneja said of Tesla’s robotaxi fleet that, because Tesla is still in the “early phase” of deploying its fleet and still doing a lot of validation and testing, the “revenue and cost per mile metrics are not meaningful to talk about at this time.”

Taneja also discussed xAI’s investment, noting that Grok, the chatbot developed by xAI, is already being used across Tesla’s fleet. “Now, if you look at Tesla vehicles, we’re using Grok there,” he said.

During his appearance at the World Economic Forum in Davos earlier this month, Musk said that Tesla plans to start selling Optimus robots by the end of next year. By repurposing the Fremont factory space, Tesla said Wednesday, it will be able to produce 1 million Optimus robots annually.