Everything Tesla Announced During Its Earnings Call: Model S/X Discont

Tesla held its 2025 Q4 earnings call to review the quarter and outline upcoming plans. Elon Musk opened the call by announcing a formal update to Tesla’s mission statement:

Amazing Abundance, in a future that’s marked by universal high income, generated primarily by robots like Optimus, driving down the cost of goods and services.

Musk also announced that Tesla will stop producing the Model S and Model X next quarter and that the Fremont production lines will be repurposed to build Optimus. The company noted that features once unique to the S and X have migrated to the Model 3 and Model Y as prices for the S and X increased.

The company reported a modest revenue decline as it shifts focus between product waves, and outlined an aggressive 2026 roadmap.

FSD & Robotaxi

Elon confirmed that fully driverless Robotaxis (no human inside and no chase car) officially began operating in Austin as of yesterday (January 27, 2026).
- He also confirmed that there is no use of chase cars or anything similar
- The first driverless Robotaxi rides are randomly selected from regular paid rides
- Tesla is still being cautious in the rollout to prevent incidents or accidents
- Autonomy will increase gradually month-to-month
- Tesla noted that the revenue and cost per mile metrics are not meaningful enough for discussion this quarter
Owners will have the ability to add or remove their car from the Robotaxi fleet
- Cars with AI4 will be able to do this
- This will provide an opportunity for customers to earn money or pay their lease/loan costs
Tesla intends to have autonomous vehicles in somewhere between a quarter to half of the United States, pending regulatory approval
- This is more cautious than prior statements that Robotaxis would be ubiquitous across the US by the end of 2026
- Tesla cited regulatory rollouts and weather conditions as reasons for careful wording
- For now, Tesla is advancing on a city-by-city and state-by-state basis due to the lack of overarching federal regulation
- Tesla announced the next cities that will join the Robotaxi network

State	Metro Area	Status / Target
California	SF Bay Area	Safety Driver (Current)
Texas	Austin	Ramping Unsupervised
Texas	Dallas	1H 2026
Texas	Houston	1H 2026
Arizona	Phoenix	1H 2026
Florida	Miami	1H 2026
Florida	Orlando	1H 2026
Florida	Tampa	1H 2026
Nevada	Las Vegas	1H 2026

Tesla disclosed FSD subscription statistics for the first time
- 1.1 million active FSD vehicles
- 70% of these are purchases (770,000)
- 30% of these are month-to-month subscriptions
- Approximately $32,670,000 in monthly recurrent revenue

Tesla AI Chips

Tesla plans to build a Terafab in the United States to integrate logic, memory, and packaging
- This is intended to mitigate future supply bottlenecks and geopolitical risks associated with importing chip parts and to vertically integrate the supply chain
- Elon noted he’s personally still working on AI5 design, which is planned for volume production in 2027
AI5 targets a 50x performance improvement over the current AI4 chip
- 10X raw compute and 9x memory capacity
Tesla is building Cortex 2 in Texas
- The plan is to more than double the on-site H100-equivalent compute capacity in the first half of 2026

Optimus

Optimus 3 is scheduled to be unveiled in a few months
- This unveiling will include the first demonstration of the updated hand design Tesla has been developing
The dedicated Optimus production line in Fremont will occupy the space freed by the Model S and Model X lines
- Volume production is expected to begin before the end of 2026
- The supply chain for this line is new and will produce a longer, slower manufacturing S-curve because every part is new
- Eventual capacity for the Fremont line is 1 million robots per year
Elon reiterated that Optimus is intended as a general-purpose robot
- Demonstrate, show it, or describe a task, and they will be able to do the task
- Primary driver of Amazing Abundance
- Significant driver of US GDP

Battery, Powertrain, & Manufacturing

Tesla confirmed it will wind down production of the Model S and Model X next quarter
- This will free factory floor space in Fremont to support construction of the Optimus production lines
- Tesla stated its future focus is on autonomy rather than manually driven cars
- Tesla will continue to support the S and X programs for the foreseeable future for existing buyers
The rollout of the refreshed Model Y with the bigger screen is now complete across all markets
- Other variants, such as the Model Y L, were not mentioned in the presentation or call
Cybercab production lines are being installed at Giga Texas
- Volume production is scheduled to begin 1H 2026
- Cybercab is being designed for a 50-to-60-hour per week duty cycle
- The typical car sees a 10-hour per week duty cycle
Tesla Semi will begin production ramp throughout 1H 2026
- New Megachargers are being deployed across the United States to support Semi rollout along major freight corridors alongside partners like FlyingJ
The Roadster remains in "Design Development", even with a second unveiling date of April 1st, 2026
Tesla intends to eventually transition the Cybertruck production line to a fully autonomous variant with no controls, with few other changes
- This will be focused on cargo delivery and logistics rather than an adventurous, do-everything pickup truck
Tesla is now producing dry-electrode 4680 cells with both anode and cathode made in Austin
- Tesla is beginning to roll out a new iteration of the 4680 Model Y using the new cells

Tesla Energy

Tesla Energy remains one of the fastest-growing segments
- Tesla deployed a record 14.2 GWh in Q4 alone (up 29% YoY)
Additional manufacturing capacity is being built out
Tesla is pursuing solar and battery deployment on Earth and solar in space for AI datacenters
- This includes vertically integrating a solar supply chain from raw materials to final product
- Tesla is aiming for 100GW/year of solar cells manufactured in the United States
Construction of Megafactory Houston is progressing well
- Mega Houston will produce Megapack 3 and Megablock starting in 2026
Tesla’s Lithium Refinery in Texas has commenced pilot production
The Tesla Powerwall Network supported over 89,000 Virtual Powerplant Events in 2025
- This saved homeowners over $1 billion in electricity bills

Financials

Tesla reported $24.9 billion in total revenue for Q4 2025 (a 3% YoY decrease)
GAAP Net Income was $0.8 billion, while Non-GAAP Net Income was $1.8 billion for Q4
Operating cash flow was $3.8B, with Free Cash Flow at $1.4B for Q4
Automotive Revenue was $69.5B, down 10% YoY
- Tesla saw increased demand in smaller markets, while there was a demand pull-back in the United States due to the end of the Federal EV Tax Credit
Energy Revenue was $12.8B, up 27% YoY
Tesla ended the year with a record $44.1 billion in cash and investments
- This pile increased by $7.5 billion throughout 2025
- Tesla’s bitcoin holdings were marked down 23% in Q4
Tesla’s CFO, Vaibhav Taneja, warned that 2026 will be a CapEx-heavy year
- $20 billion in capital expenditures are planned
Funding six concurrent factory ramps
- Lithium Refining
- LFP Batteries
- Cybercab
- Semi
- Megafactory Houston
- Optimus
Tesla is sunsetting FSD’s one-time purchase and moving to a subscription model

Forward-Looking Outlook

Tesla’s CFO called this upcoming year “a new book” for the company as it pivots to AI and robotics
Tesla has entered an agreement to invest approximately $2 billion in xAI to acquire Series E Preferred Stock
- This partnership aims to closely integrate Grok into Tesla’s products
- Grok will be the “orchestra conductor” that manages fleets of autonomous cars and robots
Tesla continues to be constrained by battery pack production

Investor Q&A

Today there are ~90M cars sold globally each year, does Tesla have a view based on its robotaxi ambition what this number will be in 5 or 10 years and how does this impact Tesla's EV strategy to have more models?

The future is autonomous
General transportation will be better served by autonomy
90% of vehicle miles are done with 1-2 people in the vehicle, making it an excellent target for Cybercab
Cybercab will not ship with steering wheels or pedals; it will either drive itself or not drive
Tesla intends to produce more Cybercabs than all of the rest of their vehicles combined

Are there still plans to launch new models to address different price segments and vehicle types which could materially expand the TAM for Tesla?

Tesla has launched their least expensive models recently
Tesla will continue to bring down the cost of vehicles without sacrificing range or premium feel
Tesla is not looking to develop further models, based on their focus on the Cybercab

Historically Tesla has spoken about Gross margin per model, are there standalone Gross Margin targets for the current models excluding the benefits of FSD sales?

Can’t apply the cars sales model to software
Autonomy software will continue to grow and be the driver of Tesla’s growth
Cybercab is designed around a 50-60-hour per week duty cycle compared to the 10-hour per week duty cycle of the average car
Only vehicles Tesla intends to design going forward will be autonomous vehicles, with the exception of the Roadster
- Roadster's debut in April is mentioned again

You once said: Loyalty deserves loyalty. Will long term Tesla shareholders still be prioritized if SpaceX does an IPO?

Skipped. Tesla does not answer non-Tesla-related questions at a Tesla Earnings Call

What is the current bottleneck to increased Robotaxi deployment & personal use unsupervised FSD? The safety/performance of the most recent models or people to monitor robots, robotaxis, in-car, or remotely? Or something else?

Tesla is working on learning scaling problems
- That means learning from safety monitors on the ground
- Long tail of the edge-case issues to solve
- Tesla has been churning through them recently with minor FSD updates and builds
- Unsupervised is now on the ground and deployed in Austin
- Fleet size in Austin will scale just like the fleet in Bay Area
- One noted item is charging constraints and service constraints
V14 is a variant of the Robotaxi software
- Updates and upgrades from the Robotaxi build will filter down to FSD for consumers

After the unveiling of the Cybertruck, Musk stated that if it hadn’t sell well, Tesla would build a more conventional-looking pickup. How practical would it be to create this new design on the Cybertruck architecture and could it be conveniently built on the existing production lines?

Cybertruck continues to be a leader in the electric pickup segment
Cybertruck line will transition to fully autonomous
- Focus will be on deliveries and logistics

Regarding Optimus, could you share the current number of units deployed in Tesla factories and actively performing production tasks? What specific roles or operations are they handling, and how has their integration impacted factory efficiency or output?

Still in R&D phases for Optimus
Some basic tasks being performed in the factory
- Old versions are being depreciated
- Factory usage is for learning, not for actual production
Optimus Gen 3 will be a big jump for capabilities, especially in the factory
Tesla expects to increase its headcount at Fremont even with the closure of the Model S/X line

When is FSD going to be 100% unsupervised?

There are fully unsupervised vehicles in Austin now
Tesla is being cautious with the rollout, still, for safety
Edge cases and challenging intersections are something they’re watching for
- Humans are having lots of accidents in these places, so FSD must be able to handle them safely
Tesla will reduce the amount of driver monitoring with each successive release as safety increases

What has surprised you about the robotaxi rollout so far, and what factors have constrained fleet expansion to date, which appears to be ~200 vehicles based on public tracking?

Not many surprises; Tesla has all the metrics
Approximately 500 vehicles between Austin and Bay Area at this point
- Varying amount based on peak and off-peak times
Tesla is deliberately slow with this
- All the supporting infrastructure is already in place; the company is choosing to proceed cautiously

Are chase cars part of the initial driverless rollout? If yes, what milestones are required to remove them, and what additional value do they provide beyond a safety monitor?

Skip

Elon has been spending significant personal time on Tesla’s chip design. What was the forcing function behind this increased involvement, and do you think external chip sales will represent a significant portion of Tesla's valuation by the end of the decade?

Elon focuses on the most significant issues facing his companies
Every Tuesday and Saturday, he is focused on AI5
AI5 will be a big leap, and AI6 will be even better
No plans to sell chips outside of Tesla until they have enough for vehicles, Optimus, and their own data centers
Elon confirmed the intent to build a Terafab in the US to consolidate and vertically integrate chip production

Call-in Questions

$20 Billion CapEx Increase, where is this going? Is this one-off or should we expect more?

Six new factories, a new data center, scaling Optimus and Robotaxi fleets, increasing training and compute speeds
Doesn’t factor in solar fab or chip fab
We should expect more large CapEx expenditures like this

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