Tesla Profits Tumble as AI Ambitions Take Center Stage

Tesla's annual profit has plunged due to competition and political involvement by Elon Musk. Despite a focus on cheaper EV models, sales were impacted. Musk emphasizes the AI future with investments in robotaxi and robotics, shifting attention from car sales. Tesla's energy storage shows growth.

Tesla has announced a significant drop in its annual profits, falling by 46% to USD 3.8 billion, marking a second consecutive year of decline. The drop comes despite the introduction of cheaper electric vehicle models, as Tesla lost its title as the world's largest EV maker to a Chinese rival, and political controversies surrounding Elon Musk, Tesla's CEO, affected sales.

Despite these challenges, Musk urges investors to focus less on car sales and more on what he envisions as the company's AI-driven future, including robotaxis and robots designed for domestic tasks. With plans to repurpose production capacity to focus on Optimus robots, Tesla is set to double its capital expenditure this year to USD 20 billion, including a USD 2 billion investment in the AI firm xAI, which has sparked controversy with its Grok AI assistant.

Nevertheless, there are positive signs: Tesla's energy storage segment has posted a 25% revenue surge, and profit margins have increased. Analysts see potential in forthcoming robotaxi services and new model launches, although there is skepticism regarding Musk's ability to meet ambitious deadlines.