Tesla ( TSLA ) reported fourth-quarter earnings after the bell on Wednesday that beat expectations. The company also said it expects to begin production of its Optimus robot by the end of the year.
Tesla reported revenue of $24.9 billion for the quarter, compared with expectations of $25.11 billion, a year-on-year decrease of 2.4%. Tesla reported adjusted earnings per share (EPS) of $0.50, compared with expectations of $0.45; operating income of $1.41 billion, compared with expectations of $1.32 billion.
Tesla’s fourth-quarter gross profit margin was better than expected, at 20.1%, compared with expectations of 17.1%.
Tesla shares rose more than 3% in after-hours trading before falling slightly.
“Preparations for production of the Tesla Semi and Cybercab (both starting in the first half of 2026) and the next-generation Roadster continue in North America,” the company said in its shareholder statement, adding that it would add six new production lines for all its products.
Tesla said it plans to launch Optimus V3 in the first quarter of this year and plans to “start production before the end of 2026, with an ultimate planned production capacity of 1 million robots per year.”
“It’s time to end the Model X and Model S programs and retire them with honor,” CEO Elon Musk said on a conference call, adding that production lines for those products will be used for Optimus robots.
Tesla noted that it has removed safety drivers from customer rides on a limited basis at its robotaxi service in Austin, but did not give a timetable for when they will be removed altogether. In terms of new metropolitan areas, Tesla noted that Dallas, Houston, Phoenix, Miami, Orlando, Tampa and Las Vegas will be targeted for robotaxi service in the first half of 2026.
Tesla said Full Self-Driving (FSD) subscriptions will double in 2025 and is still “seeking regulatory approval in China and Europe.” Tesla reports that it will have 1.1 million FSD users by the end of 2025.
Tesla also said it would invest $2 billion in preferred shares of xAI, CEO Elon Musk’s artificial intelligence startup that owns X.com.
Earlier this month, Tesla announced global vehicle deliveries in the fourth quarter of 418,227 vehicles, a 15% decrease from 495,570 vehicles in the same period last year.
Tesla delivered 1.64 million vehicles throughout the year, in line with expectations and down 8% from 2024. This marks the second consecutive year of decline in annual sales for the electric car maker.
Cheaper vehicles like the standard Model Y and Model 3 can’t remove some of the massive drag. The loss of the U.S. federal electric vehicle tax credit at the end of the third quarter, competition from new electric vehicles from legacy car brands and CEO Elon Musk’s polarizing politics all had a significant impact on Tesla’s sales decline.
It’s no wonder investors are counting on initiatives like Tesla’s FSD, robotaxi service, and Optimus robots as future catalysts for the stock.
“The main focus of the call will be the rollout of Robotaxi in the U.S., including the removal of safety drivers from its fleet, and we believe Wall Street is at a crossroads for Tesla as both bulls and bears debate how quickly the Robotaxi era will take shape in the coming year,” Wedbush analyst Dan Ives wrote on Tuesday.
Last week, Musk announced Tesla was removing safety drivers from some vehicles in its Austin, Texas, fleet, which Ives called “an important first step in its long-term vision for Robotaxi.”
Other major questions surround the rollout of robotaxis in new regions such as Arizona and Nevada, and the eventual size of the fleet. Morgan Stanley expects 1,000 Tesla robotaxis to be on the road by the end of this year.
Musk also announced that the one-time fee for FSD will be eliminated and replaced by a subscription plan, which currently costs $99 per month. Tesla also eliminated the Autopilot lane centering and adaptive cruise control features to increase FSD adoption.
Musk said this month he expected Optimus to begin sales next year, but the CEO is known for bold product timelines.
Pras Subramanian is Yahoo Finance’s chief automotive reporter. You can follow him X etc. Instagram.
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