Tesla shares extended their recent slide Thursday, finishing down 3.36% at $416.98. The electric vehicle maker is now down more than 11% over the past month as investors process the company’s fourth-quarter results and strategic direction.
Tesla, Inc., TSLA
The earnings report delivered a split message. Fourth-quarter revenue declined 3% year-over-year. Earnings per share dropped a steep 60%. Automotive revenue fell 11% as vehicle deliveries slumped 16% during the period.
But CEO Elon Musk used the earnings call to outline a dramatic shift in strategy. “We’re really moving into a future that is based on autonomy,” Musk told analysts.
Tesla will stop making its Model S sedan and Model X SUV next quarter. These vehicles helped establish Tesla as a serious automaker, with the Model S debuting in 2012.
The production lines will be retooled to manufacture new products like the Cybercab robotaxi and Optimus humanoid robots.
Tesla disclosed it now has 1.1 million paying full self-driving subscribers. That represents 38% growth from a year ago, outpacing the company’s 22% vehicle delivery growth.
Around 500 robotaxis currently operate in Austin and San Francisco. Tesla wants to expand to seven additional cities in the first half of 2026. The company plans to double its robotaxi fleet monthly.
Cybercab production begins in April. This purpose-built autonomous vehicle will ship without a steering wheel. Analysts expect Tesla could surpass Waymo’s 2,000-vehicle fleet by April.
Musk even suggested converting Cybertruck production to autonomous delivery vehicles for urban cargo transport.
Tesla plans to unveil its Optimus Gen 3 humanoid robot this quarter. Production should start before year-end with capacity eventually reaching 1 million units annually.
One analyst estimated that selling 500,000 Optimus robots at $50,000 each would generate $25 billion in revenue. The discontinued Model S and X brought in roughly $3 billion.
Free cash flow dropped 30% to $1.4 billion in Q4. This pressure will continue through 2026 as Tesla ramps up AI and manufacturing investments.
Capital expenditures will top $20 billion this year, up from approximately $8.5 billion in 2025. The spending covers AI infrastructure and new production facilities.
Tesla didn’t provide 2026 delivery guidance. The company only said deliveries “will be impacted by aggregate demand for our products, supply chain readiness and allocation decisions.”
Energy storage deployment grew 29% to 14.2 gigawatt-hours in Q4. The stock trades at a price-to-earnings ratio around 389.
Wedbush analyst Dan Ives believes Tesla could hit a $2 trillion market cap in early 2026 and potentially $3 trillion by year-end in an optimistic scenario. The company currently trades at a $1.4 trillion valuation.
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