Posted January 29, 2026 9:56 am 4 min read Story continues below advertisement Musk has been urging investors to focus less on car sales and more on what he considers a bright new artificial intelligence future of robotaxis ferrying millions in cars without drivers, or even steering wheels, and robots watering plants and taking care of elderly parents. On a conference call, Musk underlined that shift by announcing Tesla had decided to close down production of two older car models, S and X, in the second quarter and convert a Fremont, California, factory to produce its Optimus robots instead. Making those future ambitions a reality will take money. Officials said Tesla would spend big on AI and other new projects this year, more than doubling capital expenditures to $20 billion. And the company revealed it had recently invested $2 billion in the artificial intelligence company xAI, raising potential conflicts of interest issues as Musk holds big stakes in both companies. View image in full screen Visitors view Tesla Bot Optimus during the 2024 World AI Conference & High-Level Meeting on Global AI Governance at Shanghai World Expo Exhibition and Convention Center on July 4, 2024 in Shanghai, China. Long Wei/VCG via Getty Images That AI business, known for its Grok AI assistant, has courted controversy for echoing Musk’s views on race, gender, and politics and, recently, producing nonconsensual sexualized deepfake images. Story continues below advertisement Tesla’s fourth quarter profit also fell sharply, dropping 61 per cent to $840 million, or 24 cents. But excluding one-time charges, net income totalled 50 cents per share, compared to analysts’ forecasts of 45 cents. Get daily National news Get the day's top news, political, economic, and current affairs headlines, delivered to your inbox once a day. Sign up for daily National newsletter Sign Up By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy. “They’ve got aging product that is less and less competitive as other manufacturers come out with new models, then there is the general brand destruction,” said Telemetry analyst Sam Abuelsamid. “Musk‘s involvement in politics has turned off customers.” There were hopeful signs in the report, too. Tesla’s energy storage business, though small compared to the car sales, posted strong numbers last quarter with revenues surging 25 per cent to $3.8 billion reflecting demand from new datacentres sucking up energy around the U.S. Tesla’s gross profit margins were another bright spot, leaping to 20 per cent last quarter from 16 per cent a year ago. “Tesla’s ability to show improving profitability was a surprise,” said Morningstar analyst Seth Goldstein. 3:38