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Tesla announced on Wednesday that it will invest $2 billion into CEO Elon Musk's artificial intelligence company, xAI, as the automaker presses forward with production plans for its Cybercab robotaxi.

The move reinforces Musk's vision of transforming Tesla from primarily an electric vehicle maker into an AI-driven technology company.

The investment, part of xAI's $20 billion financing round, comes as Tesla seeks to reassure investors about its ambitious production plans, CNBC reported.

CFO Vaibhav Taneja warned that building Cybercabs, humanoid robots, Semi trucks, and Roadster sports cars will push Tesla's capital expenditures above $20 billion in 2026 — more than double the $8.5 billion spent in 2025.

Tesla shares initially rose 3.5% in after-hours trading before settling up 1.8%.

Analysts note Tesla is in a transition phase, asking investors to back potential revenue from self-driving software and robotaxi services while auto sales remain under pressure.

"That makes rollout metrics — not deliveries — the most important leading indicator from here," said Thomas Monteiro, senior analyst at Investing.com.

Musk has previously promised widespread deployment of fully autonomous vehicles, though Tesla has missed earlier targets, including its robotaxi rollout in Austin, Texas.

Despite challenges, Musk told analysts that Cybercab production is on track for this year, though initial output of the humanoid robot Optimus will remain limited until late 2026.

Tesla Revenue Dips 3% in 2025

Tesla's core EV business, which still drives most revenue, has faced headwinds from rivals, pricing pressures, and the end of US EV tax incentives.

Musk also confirmed the company will discontinue Model S sedans and Model X SUVs, repurposing factory space for robot production.

Tesla revenue fell about 3% to roughly $94.83 billion in 2025, though automotive gross margins improved to 17.9%, surpassing expectations.

According to Reuters, energy generation and storage remains a bright spot, with revenue up 25.5% to a record $3.84 billion in Q4 2025, exceeding analyst projections.

Investors are also optimistic about Tesla's xAI collaboration. The AI startup, launched in 2023, is known for its Grok chatbot and image generator.

Tesla indicated it will explore "potential AI collaborations between the companies," pending regulatory approval, expected to close in Q1 2026.

xAI has recently faced global scrutiny over Grok's ability to generate deepfake images without consent, prompting investigations from the European Commission, California DOJ, and authorities in Australia, India, Ireland, and France.

"Tesla's investment allows investors to tap into the scorching hot AI boom while supporting Musk's ambitious robotaxi and automation goals," said Andrew Rocco, stock strategist at Zacks Investment Research.

Tags

Elon Musk, Tesla