Tesla Rises 2% on Q4 Beat, Robotaxi Expansion Plans
EV maker posts $0.50 adjusted EPS, beating estimates. Austin robotaxi pilot goes fully driverless as expansion to 7 cities planned.
Tesla turned in a better-than-expected Q4 on Wednesday night, and for once the story wasn't about vehicle deliveries.
The company posted adjusted earnings of $0.50 per share versus the $0.45 consensus. Revenue hit $24.9 billion. Shares rose 2% after hours as Elon Musk outlined aggressive robotaxi expansion plans and confirmed a $2 billion investment in his AI startup xAI.
After two years of falling vehicle sales, Tesla is leaning hard into its "physical AI" pivot.
The Numbers
Fourth-quarter revenue of $24.9 billion came in roughly flat year-over-year. GAAP earnings per share of $0.24 were below the $0.50 adjusted figure due to various charges.
The numbers themselves weren't exceptional. We already knew Q4 deliveries missed expectations at 418,227 vehicles. Full-year deliveries of 1.64 million marked a 9% decline from 2024—the second consecutive annual drop.
What moved the stock was everything Musk said about the future.
Robotaxi Goes Driverless
Tesla's Austin robotaxi pilot quietly hit a milestone last week: the company removed human safety operators from a handful of vehicles to conduct fully driverless passenger rides.
Management confirmed on the earnings call that expansion is coming fast. Seven additional U.S. markets will get robotaxi service in the first half of 2026: Dallas, Houston, Phoenix, Miami, Orlando, Tampa, and Las Vegas.
The dedicated Cybercab—a purpose-built vehicle with no steering wheel or pedals—remains on schedule for production in 2026. Tesla is betting its future on becoming a robotaxi operator, not just a car manufacturer.
Whether regulators agree remains to be seen. Tesla's approach differs from Waymo's in that it relies primarily on cameras and neural networks rather than lidar and pre-mapped routes. That makes expansion cheaper but approval harder.
The xAI Connection
Tesla is investing approximately $2 billion to acquire shares in xAI, Musk's artificial intelligence startup.
The move further blurs the line between Tesla and Musk's other ventures. xAI develops large language models and recently launched the Grok chatbot. How that technology integrates with Tesla's vehicle AI stack isn't entirely clear, but Musk characterized the investment as complementary to Tesla's "physical AI" direction.
On the call, Tesla described 2025 as a "critical year" for the company's transition from pure EV manufacturer to AI company. The xAI investment, combined with the robotaxi push and Optimus development, represents that strategic shift in capital allocation.
Optimus Updates
Tesla is installing first-generation production lines for the Optimus humanoid robot, anticipating volume production by year-end. The company will unveil Optimus Gen 3 in Q1 2026—the first version designed for mass manufacturing rather than prototype demonstrations.
The Optimus project remains speculative from a revenue perspective. But Musk has repeatedly suggested it could eventually become larger than Tesla's vehicle business. Investors get a free option on that outcome.
Energy Business Record
The energy division posted record gross profit for Q4, driven by strong demand for Megapack utility storage and residential Powerwall units. Full-year energy storage deployments hit 46.7 GWh.
Energy is becoming a meaningful contributor. It doesn't have the growth potential of robotaxis or the hype of Optimus, but it generates real cash flow today.
What It Means
Tesla's Q4 shows a company managing declining vehicle sales while pivoting toward higher-margin, software-driven businesses. Whether that pivot succeeds depends on robotaxi regulatory approval and Optimus commercialization—both uncertain timelines.
For traders, the 2% after-hours gain suggests the market is willing to give Tesla credit for the AI narrative even as the core car business struggles. That's a bet on Musk's vision, not current fundamentals.
The Magnificent Seven earnings picture is coming into focus: Meta and Tesla beat, Microsoft disappointed. Apple reports Thursday. The dispersion in outcomes reflects just how different these businesses have become.