Tesla’s 61% Profit Plunge: Musk Pivots to AI “War Footing” as EV Sales Cool
Elon Musks Tesla has really shaken things up in the money world. They just said they made 61 percent money in the last part of the year. This news came out on Wednesday night. It looks like Tesla is having a time right now. The main part of their business, which’s electric cars is not doing great. People are getting tired of all the price cuts. There are not as many people buying cars around the world as there used to be. At the time Tesla is spending a lot of money on something new called Agentic AI and, on their Robotaxi cars, which they have been talking about for a long time. Tesla is really putting a lot of money into these things.
Tesla is not doing things like car companies anymore. It is doing things like a company that is working with computers and artificial intelligence. Tesla is willing to lose money so that it can be really good with computers in the future. This means Tesla is thinking about what it can do tomorrow not what it can do today. Tesla wants to be the best, with computers. It is willing to make sacrifices now for that to happen.
The “EV Winter” Hits Hard
The big drop in profit at Tesla is mainly because people around the world are not as excited about cars as they used to be. Even though Tesla lowered their prices a lot in 2025 they are not selling many cars as they thought they would. This is because it is expensive to borrow money in the United States and companies like BYD and Xiaomi, from China are making cars that are affordable. Tesla had to decide if they wanted to sell a lot of cars or make a lot of money. In the part of the year they decided to sell a lot of cars but this hurt their profit margins very badly. Teslas profit margins used to be very good. Now they are not.
The days when car companies could make a lot of money are gone for now said a senior automotive analyst. Elon Musk is basically using the car business to pay for his Artificial Intelligence projects but the car business is not making much money as it used to so it is running out of cash to fund his Artificial Intelligence ambitions.
The AI Capital Vortex: Spending Billions to Build “Brains”
The car sales for Tesla were not that great. The company spent a lot of money on research and development. This is the money Tesla has ever spent on this. Tesla said it is spending money on the Dojo Supercomputer and on getting the hardware ready, for the Full Self-Driving Version 13. Tesla is really investing in the Full Self-Driving technology the Full Self-Driving Version 13 to make it better.
Things that make costs go up include:
H100/B300 Clusters: Billions spent on Nvidia’s latest silicon to train the “End-to-End” neural networks for Tesla’s humanoid robot, Optimus.
The Optimus Scaling project is not going as planned. The Optimus Gen-3 robot is being tested inside Teslas factory in Texas. Far these internal trials of the Optimus Gen-3 robot have cost more money than people thought they would. The cost of these trials of the Optimus Gen-3 robot is higher, than what was expected at first.
The company is getting ready to launch the Cybercab in 2026. This is a deal because the Cybercab needs a lot of new infrastructure to work. The Cybercab is, like a kind of taxi that runs on its own. To make this happen the company has to build a network of services to support the Cybercab. The problem is that this network is still untested and it is costing the company a lot of money. The companys cash reserves are being used up to pay for this network. The Cybercab rollout is a project and it needs a lot of money to get it off the ground.
The “Musk Premium” vs. The Reality Gap
Elon Musk is still not backing down. He told investors on the call about how money Tesla made that people who do not think of Tesla as an AI and Robotics company are just wrong.. Big investors are starting to get tired of Elon Musk. There is a difference between what Elon Musk says about Tesla having a big future with Robotaxi and the fact that Tesla made 61 percent less money. Elon Musk cannot make this difference go away by posting messages on Twitter. Elon Musk and his ideas about Tesla, as an AI and Robotics company are not convincing investors anymore.
The 2026 outlook remains hazy. Tesla has hinted at a “Next-Gen” affordable model priced under $25,000, but production isn’t expected to reach scale until 2027. Until then, Tesla’s survival depends on whether the market continues to value it as a tech titan rather than a struggling car manufacturer.
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