Tesla $TSLA ( ▲ 3.33% ) just delivered a reality check: the company’s present is still very much tied to selling cars, even as investors price it like a robotics and AI powerhouse.
The company posted its first-ever annual revenue decline, with 2025 revenue slipping 3% to $94.8 billion. Automotive revenue fell 10% as EV demand softened, dragging down deliveries and average selling prices. While Tesla talks a big game about autonomy and humanoid robots, nearly three-quarters of its business still comes from old-fashioned vehicle sales.
Energy is growing fast, but it’s not the main engine yet
One bright spot was Tesla’s Energy Generation and Storage division, which sells solar systems and large-scale batteries. That segment pulled in nearly $13 billion in revenue last year, up 27% year over year, and now makes up about 13% of total sales. That is meaningful growth, but it is still a supporting character in a story dominated by cars.
Elon Musk clearly wants to flip that script.
Musk is clearing factory space for robots, not sedans
Elon Musk said Tesla will phase out production of its two most expensive EV models next quarter and convert that factory capacity to build Optimus, the company’s humanoid robot. The catch is that Optimus is not expected to be commercially available until late 2027, meaning near-term revenue still depends heavily on vehicles.
At the same time, Tesla is pushing its Robotaxi ambitions, expanding service beyond early markets and eventually tying it to its purpose-built Cybercabs. It is also leaning harder into recurring revenue through Full Self-Driving subscriptions, trying to turn software into a bigger slice of the pie.
The transformation story is expensive
All of this future-building is hitting today’s financials. Operating income fell 38% year over year, and capital expenditures are set to jump sharply as Tesla pours money into AI infrastructure, robots, and autonomy. Even so, Tesla’s expected $20 billion capex for 2026 looks modest next to Meta, which could spend up to $135 billion this year.
So the split is getting clearer: the economics of Tesla the company still revolve around cars, but the economics of Tesla the stock are increasingly about whether investors believe Musk can turn robots, AI, and autonomy into the next growth engine.