Tesla plans heavy spending on AI and new projects this year, more than doubling capital expenditure to about $20 billion.
Tesla posted its lowest annual profit since the pandemic five years ago, as intensifying competition, weak demand and consumer backlash weighed on sales, even as the company doubled down on its ambitions in artificial intelligence and robotaxis.
The electric vehicle maker said that net income fell 46% last year to $3.8 billion, marking a second consecutive year of steep declines. The drop came as Tesla lost its position as the world’s largest EV manufacturer to a Chinese rival and faced boycotts linked to chief executive Elon Musk’s political activities.
Despite the profit slump, Tesla shares are up about 9% over the past year, reflecting investor confidence in Musk’s longer term vision. He has repeatedly urged shareholders to look beyond car sales towards a future centred on robotaxis and humanoid robots.
On an earnings call, Musk said Tesla would shut production of its older Model S and Model X vehicles in the second quarter and repurpose part of its Fremont, California, factory to produce Optimus robots. The company said it would more than double capital expenditure this year to about $20 billion, largely to fund AI and new projects.
Tesla also disclosed a recent investment of $1 billion in Musk owned AI firm xAI, raising questions over potential conflicts of interest.
Fourth quarter profit fell 61% to $840 million, although adjusted earnings beat analyst expectations. Tesla’s energy storage business posted a 25 per cent revenue increase to $3.8 billion, while gross margins improved to 20%.
