Tesla's Strategic Shift: Betting Big on AI and Robotics

Tesla commits $2 billion to Elon Musk's AI venture, xAI, as it pivots from electric vehicles to artificial intelligence and robotics. Amid revenue challenges and increased competition, Tesla focuses on self-driving technology, robotaxis, and humanoid robots, bolstering its energy business and tech ambitions.

Tesla announced a $2 billion investment into CEO Elon Musk's AI company, xAI, aligning with its transition from a solely electric vehicle (EV) manufacturer to a broader AI and technology firm. The move supports Musk's goal to integrate AI capabilities into Tesla's operations, crucial for maintaining its $1.5 trillion valuation.

Amidst economic hurdles, Tesla's core EV sales face pressure due to increased competition and the cessation of U.S. tax incentives. Yet, the company reports a robust automotive gross margin and significant growth in its energy generation and storage segment, which saw a 25.5% increase to $3.84 billion in revenue last December.

The company's strategic shift emphasizes self-driving technology and expanding robotics. Musk's optimism for half of the U.S. to access fully autonomous vehicles remains, albeit delayed. While challenges persist, such as regulatory hurdles for its Cybercab, investor interest remains strong, evidenced by a notable rise in Tesla's share price.

(With inputs from agencies.)