Tesla unveiled ambitious plans during its Q4 2025 earnings call. CEO Elon Musk announced an updated company mission focused on “amazing abundance,” emphasizing optimism about AI-driven universal high income and the expansion of autonomous vehicle production, including the ramp-up of the Optimus humanoid robot and the upcoming Cybercab.
The company also revealed plans to end Model S and X production next quarter to repurpose its Fremont factory for Optimus manufacturing, while highlighting record energy deployments and significant capital expenditures exceeding $20 billion in 2026 to scale factories, AI compute infrastructure, and battery supply chains.
Tesla’s leadership underscored ongoing advancements in Full Self-Driving (FSD) technology, expansion of subscription models, and cautious rollout of unsupervised Robotaxi services, projecting robust growth despite supply chain challenges and geopolitical risks.
5:02 – Introduction and Q4 2025 webcast overview
The webcast begins with Travis Axelrod, head of investor relations, welcoming attendees to Tesla’s fourth quarter 2025 Q&A session. He introduces Elon Musk, Beveneza, and other executives present for the call. The Q4 results were released earlier the same day, and the webcast will cover Tesla’s business outlook and related topics.
Travis outlines that the discussion will include forward-looking statements based on current predictions and expectations, cautioning that actual outcomes may vary due to risks and uncertainties noted in Tesla’s SEC filings. He also provides instructions for the Q&A session, requesting participants limit themselves to one question and one follow-up, and use the raise hand feature to join the queue. Following this, Elon Musk is set to deliver his opening remarks.
5:56 – Tesla’s mission update to “amazing abundance”
Elon discusses updating Tesla’s mission to focus on achieving ‘amazing abundance,’ reflecting optimism about a future driven by AI and robotics. He envisions a world with universal high income, not just basic income, where safety is improved, costs are reduced, and people have access to anything they need without compromise. He emphasizes maintaining environmental beauty and nature, ensuring that everyone can have whatever they want, including excellent medical care, as the ideal future.
7:35 – Investments in autonomy, batteries, and AI chips
Tesla is taking significant steps this year to increase vehicle autonomy and begin large-scale production of Optimus robots. The company is making substantial capital expenditures, focusing on investments that support a transformative future. Key areas of investment include batteries and their entire supply chain, solar cell manufacturing, and AI chip development. These strategic investments are aimed at efficient capital use and long-term growth.
8:53 – Ending Model S and X production for Optimus factory
Elon announces the planned discontinuation of the Model S and Model X vehicle programs, marking an end to their production by next quarter. Customers interested in purchasing these models are advised to order soon. Although production will cease, support for existing Model S and X vehicles will continue. The production space at the Fremont factory currently used for these models will be repurposed into a factory for Optimus robots, with an ambitious goal of producing one million units annually.
10:10 – Advances in Full Self-Driving and Robotaxi progress
The discussion focuses on the ongoing shift toward an autonomous future, especially highlighting advancements in Tesla’s Full Self-Driving (FSD) technology. With each software update, Tesla vehicles improve their autonomy. Recently, Tesla conducted paid rides in Austin with no safety monitors present in the cars. Additionally, these autonomous vehicles no longer require chase cars or human followers, demonstrating increased confidence in the system’s safety and reliability.
Tesla emphasizes a cautious approach to deploying autonomous vehicles to avoid injuries or serious accidents. Despite this caution, the level of autonomy is expected to increase substantially on a monthly basis. There is also a plan to allow existing Tesla owners to add or remove their cars from the autonomous fleet, similar to how Airbnb operates, expanding the network of autonomous vehicles.
12:07 – Tesla’s autonomous fleet and subscription model
Musk discusses the potential for Tesla owners to add or subtract their vehicles from an autonomous fleet, similar to how homes are added to Airbnb. This could allow owners to earn income by lending their cars, potentially covering or exceeding their lease costs. They anticipate a significant rollout of fully autonomous vehicles across the United States by the end of the year, depending on regulatory approval and federal preemption for autonomous vehicle laws. Even without federal preemption, Tesla expects to operate in many major cities on a state-by-state or city-by-city basis. Additionally, the Tesla energy division is experiencing strong growth due to the team’s impressive work.
14:07 – Energy segment growth and solar production plans
Musk discusses the high expected growth in energy demand, emphasizing that solar energy opportunities are underestimated. He highlight the importance of solar and battery technologies both on Earth and in space, particularly for powering AI data centers. The goal mentioned is to achieve 100 gigawatts per year of solar cell production.
14:45 – Optimus robot development and million-unit goal
Musk discusses the integration of production across the entire supply chain, from raw materials to finished solar panels, and introduces Optimus 3, an advanced robot. Optimus 3 represents a new manufacturing line replacing the S, X line in Fremont with a target of one million units per year.
The supply chain for Optimus is entirely new, designed from physics first principles, which means its manufacturing ramp-up will be slower compared to products with existing supply chains. Production speed depends on the slowest part of the supply chain, causing a stretched out production curve.
Despite the challenges, confidence remains high that Optimus 3 will reach the production goal of one million units annually in Fremont. The robot is highly capable and general purpose, able to learn tasks by observing human behavior, verbal instructions, or videos. The long-term impact of Optimus on the US economy is expected to be significant, potentially moving the needle on GDP. He acknowledges skepticism but emphasizes that Tesla is making the right technological moves to achieve abundant production.
Tesla embraces solving difficult problems as a core value, which is essential for creating real value in the company. Musk praises the Tesla team’s talent and hard work and expresses gratitude to everyone involved for their efforts in tackling these challenges.
18:00 – Q4 2025 results and automotive margin details
The quarter Q4 2025 showed notable developments in Tesla’s automotive and storage sectors. In the US, demand surged in Q3 before a consumer credit cliff in Q4, while other regions like Malaysia, Norway, Poland, Saudi Arabia, and Taiwan experienced record deliveries. Overall, Tesla ended the year with a larger backlog than recent years, despite these countries lacking the latest FSD supervised version. The storage segment also hit a deployment record, reflecting strong customer support and momentum.
Automotive margins improved sequentially from 15.4% to 17.9% excluding credits, with gross profit remaining flat despite 16% lower deliveries due to a favorable regional mix emphasizing APAC and AMIA. Battery pack supply remains the biggest global constraint, prompting creative solutions such as using 4680 cells in non-structural packs. The Full Self-Driving (FSD) customer base grew to nearly 1.1 million paid users, with about 70% upfront purchases. Tesla is transitioning to a subscription-based FSD model, which will affect net additions and short-term automotive margins.
Tesla’s energy segment achieved record gross profit and 26.6% year-over-year revenue growth, driven by strong deployments and demand for Megapack and Powerwall across regions. The backlog remains strong and globally diversified, with expectations for increased deployments following the launch of Mega Pac 3 and Mega Block. However, margins are expected to compress due to low-cost competition, policy uncertainties, and tariffs. Services and others margins declined mainly due to higher employee costs, although supercharging margins showed improvement. Early costs related to the robo-taxi business are included but not yet material.
Tesla ended the quarter with a total gross margin exceeding 20.1%, a level not seen in over two years, despite tariffs exceeding $500 million and lower fixed cost absorption. Operating expenses rose due to increased stock-based compensation and charges related to a 2025 performance award for an operational motor. Spending on AI initiatives and new products like Cybercab, Semi, Optimus, and Megapack remains elevated and is expected to continue through 2026. Net income was negatively impacted by mark-to-market losses on Bitcoin holdings and unfavorable foreign exchange effects. Free cash flow totaled $1.4 billion, with capital expenditures slightly below prior guidance, though 2026 is anticipated to be a major investment year.
23:35 – 2026 capex plans and factory expansions
The company anticipates capital expenditures exceeding $20 billion to fund six factories, including a refinery, LFP factory, Cybercab, Semi, a new mega factory, and the Optimus factory. Additionally, investments will be made in AI compute infrastructure, expanding existing factory capacity, and growing the Robotaxi and Optimus fleets. This comprehensive investment approach is viewed as essential for positioning the company for future growth, with a focus on capital efficiency. Potential solar cell manufacturing investments are not yet included as plans are still in early stages. The speaker emphasizes that 2026 marks the beginning of a transformative era for the company, expressing gratitude to customers and investors for their support in this exciting new chapter.
25:21 – Robotaxi market impact and Cybercab design
Tesla anticipates that the rise of autonomous vehicles, particularly through its Robotaxi concept, will significantly change the global vehicle market. With over 90% of vehicle miles currently traveled by one or two passengers, Tesla designed the CyberCab specifically for this use case. The company believes its advantages in efficiency, cost, and manufacturing scale position it well to dominate this growing market segment.
The CyberCab is a dedicated two-seater autonomous vehicle without a steering wheel or pedals, meaning it cannot be manually driven. Production is expected to start in April, with an S-curve growth in production volume. The terminology around ‘Robotaxi’ and ‘CyberCab’ is clarified, noting some regulatory restrictions on naming.
Tesla expects to produce more CyberCabs annually than all its other vehicles combined, given that the majority of miles driven are by one or two occupants, mostly just one. The production volume will start slowly, increase exponentially, then stabilize as it reaches target capacity.
28:20 – New vehicle models and autonomous transportation
Tesla is expanding its range of models to cover different price segments and vehicle types, aiming to grow its total addressable market. They have introduced their least expensive models recently and continue to reduce vehicle costs without compromising range, performance, or premium quality. With the upcoming launch of CyberCab, Tesla plans to deliver a premium ride experience tailored for the autonomous transportation market, which could be substantially larger than current production levels. The future vision emphasizes transportation as a service rather than just vehicle sales, with Robotaxis like CyberCab expected to dominate autonomous miles traveled. They anticipate that autonomous driving will account for the vast majority of miles driven, possibly leaving less than 5%, or even as low as 1%, to manual driving. Regarding gross margin targets, Tesla notes that traditional car sales frameworks may not apply directly due to the evolving transportation model focused on autonomous services.
30:14 – Gross margin targets and CyberCab optimization
The discussion focuses on the strategic emphasis on autonomy software as a key driver for growth, with a strong focus on managing costs of goods sold (COGS). The CyberCab is designed specifically to optimize the cost per mile for autonomous driving, which differs significantly from traditional vehicles designed for human drivers.
The CyberCab is optimized for a much higher duty cycle, expected to operate around 50 to 60 hours a week, compared to about 10 to 11 hours for a driven vehicle. This reflects the significantly increased usage an autonomous vehicle would undergo compared to typical personal car usage.
Because autonomous vehicles will be used much more intensively, they must be designed for greater wear and tear and resilience, similar to commercial trucks. Future CyberCab models will be larger and purpose-built for full autonomy, accommodating continuous or near-continuous operation.
Tesla has already revealed and prototyped large, fully autonomous vehicles, even providing rides to people. The company is transparent about its plans for autonomous vehicle development, signaling a clear long-term commitment to this direction.
Going forward, Tesla intends to manufacture only autonomous vehicles, with the exception of the next-generation Roadster, which is planned for debut in April and is expected to be an extraordinary product. The session then shifts focus back to Tesla-related questions for the audience.
33:14 – FSD unsupervised deployment and scaling challenges
The discussion addresses the current bottlenecks in deploying Robotaxis and unsupervised Full Self-Driving (FSD) technology. Tesla has scaled its Robotaxi service over the past year to learn about scaling challenges and improve safety with monitored fleets. Recently, they began an unsupervised Robotaxi service in Austin, with customers taking rides without a remote driver. Alongside this, Tesla expanded the fleet in the Bay Area and Austin to identify issues such as charging. Software updates, including the V14 release, have significantly improved performance, receiving positive customer feedback. Tesla’s extensive charging and service infrastructure is highlighted as a key advantage that enables rapid scaling to meet growing autonomous vehicle demand.
35:41 – Cybertruck production flexibility and autonomous uses
Tesla continues to lead the electric pickup truck segment with the Cybertruck selling more than any competitor despite others pulling back. The company designs its production lines to be highly flexible, allowing multiple vehicle models like the Model 3, Model Y, and S and X to be built on the same line. The Cybertruck line was designed with this flexibility in mind and is one of Tesla’s most advanced platforms ready for full autonomy. Tesla plans to transition the Cybertruck line to fully autonomous production, targeting markets such as localized cargo delivery within cities.
Autonomous Cybertrucks could be very useful for local cargo movement within urban areas. The discussion then shifts to Optimus robots, with questions about the current number deployed in Tesla factories, their specific production roles, and the impact they have had on factory efficiency and output. The response indicates that the integration and deployment of Optimus robots are ongoing.
37:11 – Optimus deployment status and factory integration
The discussion focuses on the early stages of Optimus, a robot still in the R&D phase. Currently, Optimus performs basic tasks in the factory, but older versions are regularly deprecated as new ones are developed. Significant production volume of Optimus is not expected until the end of the year. The latest version, Optimus Gen 3, is highly advanced and human-like in appearance, which aids in teaching the robot tasks by mimicking human behavior.
Despite industry-wide layoffs, Tesla’s Fremont factory plans to increase headcount and significantly boost factory output over time. There are no plans for layoffs.
38:59 – FSD unsupervised safety and city-specific challenges
The discussion focuses on the current status of Full Self-Driving (FSD), which is already operating 100% unsupervised in Austin without a safety monitor or follow car. However, Tesla is cautious about the rollout for customers, ensuring the system can handle unique and difficult intersections where many human accidents occur, such as those in Los Angeles. This careful approach aims to address specific challenges in different cities to maintain safety.
Tesla emphasizes the importance of FSD handling complex traffic scenarios, like the busy intersections on Wilshire and Santa Monica in LA, known for frequent accidents. The company is very cautious about safety and plans to gradually reduce driver monitoring requirements as each new FSD release proves safer. The conversation then shifts to questions about the rollout of Robotaxis.
40:51 – Robotaxi rollout progress and fleet scaling
The discussion covers the expansion and scale of the autonomous vehicle fleet, confirming there are around 200 vehicles tracked publicly but over 500 over taxi vehicles carrying paid customers between the Bay Area and Austin. The fleet size fluctuates with demand, peaking during busy times and shrinking during off hours, with expectations of doubling every month on an exponential growth curve. The team has been deliberate and methodical in building the necessary supporting infrastructure such as service centers and charging stations, adapting to the unique needs and infrastructure differences of each city. This long-term effort has enabled the launch of unsupervised service in Austin and positions the company to improve further.
The conversation transitions to a new topic, discussing Elon Musk’s increased personal involvement in Tesla’s chip design and the motivations behind this shift, as well as the potential for external chip sales.
43:00 – Tesla’s AI chip design and production priorities
The speaker emphasizes the critical importance of completing the AI5 chip design for Tesla, dedicating significant time to its development, including Saturdays and Tuesdays. They express confidence in the AI5 chip’s quality and highlight the upcoming AI6 chip, expected to be a major advancement within a year. The priority is to produce enough chips to meet Tesla’s vehicle and Optimus production needs before considering external sales.
Tesla currently uses AI4 chips and Nvidia hardware for data center training but anticipates that chip production will become the primary growth constraint in the next three to four years. Because of this, Tesla plans to prioritize internal chip use rather than selling chips externally. The speaker reveals plans for Tesla to build its own large-scale semiconductor fabrication plant (TeraFab) to ensure sufficient supply, addressing limitations from current suppliers and strategic partners.
The need for a Tesla-operated large-scale fab is driven by insufficient output from suppliers like Samsung, TSMC, and Micron, as well as geopolitical risks that could threaten supply chains. Musk acknowledges the challenges of building fabs but cites Tesla’s history of overcoming difficult manufacturing tasks such as car factories and battery production. They stress the importance of integrating logic, memory, and packaging capabilities domestically to remove supply constraints.
There are currently no advanced memory fabs at scale in the U.S., which is a critical gap Tesla aims to fill. The company is collaborating with strategic partners on chip supply but believes building its own fab is essential to avoid supply chain limitations, especially under potential geopolitical tensions. Elon describes the initiative to build the Tesla TeraFab as crucial and hints at a forthcoming major announcement regarding this project.
49:37 – Capex allocation and funding strategies for 2026
During the analyst Q&A, Emanuel from Wolf Research asked about the significant increase in capex to over $20 billion this year, seeking details on which product lines or technologies are driving this investment and whether the high spending is temporary or ongoing. The response explained that the capex is driven by starting production in six new factories, scaling the Optimus project which requires more compute resources, and expanding capacity at existing factories. The current $20 billion does not include future investments in solar or semiconductor fabs, which represent longer-term infrastructure plays. Funding will primarily come from the company’s substantial cash reserves of over $44 billion, with potential additional financing through bank loans backed by predictable cash flows, such as from the Robotaxi fleet. For larger infrastructure projects, alternative funding methods like more debt may be considered.
53:27 – Investment in xAI and strategic AI collaboration
The discussion begins with a question about Tesla’s recent investment in the xAI and the collaboration between the companies. The response highlights that this investment is part of Tesla’s master plan 4. Tesla is already using Grok technology in its vehicles and sees value in leveraging external advancements like those from xAI to accelerate progress. The investment aligns with strategic goals and shareholder interests, as many investors encouraged Tesla to invest in xAI.
Grok technology is expected to significantly improve the efficiency of managing a large autonomous vehicle fleet, potentially numbering in the tens of millions. It would offer better solutions than manual or heuristic approaches. Additionally, Grok could function as an ‘orchestra conductor’ to coordinate Optimus robots in complex tasks such as building factories or refineries, which are critical for increasing US industrial capacity. Although this is currently hypothetical, it demonstrates the potential role of AI in organizing large-scale robotic operations.
The conversation concludes with a mention of the need for more refining capacity in the US and the hypothetical use of Grok to manage thousands of Optimus robots in such industrial projects. The dialogue then transitions to the next question from a new participant, signaling the end of this segment.
57:20 – Memory constraints and AI efficiency for scaling
The discussion focuses on memory constraints and procurement challenges for Tesla’s AI systems, particularly in the near term. Tesla emphasizes its AI’s high compute and memory efficiency, claiming superior intelligence density per gigabyte compared to other large AI models. This efficiency positions Tesla well for scaling despite tight memory supplies. They foresee having a solution for logic and memory supply for about the next three years. However, beyond that timeframe, risks emerge due to geopolitical uncertainties and limited semiconductor fabrication capacity, highlighting the need to increase US fab capacity to ensure chip availability.
Tesla underscores the critical dependency of its Optimus humanoid robot on AI chips, noting that without these chips, Optimus would be non-functional unlike cars which can be retrofitted. They have a solid supply plan for the next three years but anticipate supplier limitations thereafter, necessitating strategic planning to avoid production bottlenecks. The segment ends with a transition to a new question about competition in the humanoid robot market, particularly from Chinese startups.
1:00:52 – Competitors in humanoid robots and Optimus advantages
The discussion highlights that the biggest competition for humanoid robots will come from China, due to its strong capabilities in scaling manufacturing and advances in AI. Chinese AI models, some of which are distributed for free, are improving rapidly. While significant competitors outside China are not evident, China remains the toughest rival for Tesla in this space.
Tesla believes its Optimus robot will surpass any humanoid robot currently in development in China, especially in real-world intelligence and electromechanical dexterity, particularly hand design. The three major challenges in humanoid robotics are creating a highly dexterous hand, developing real-world AI, and scaling production. Tesla claims to be the only company addressing all three effectively.
1:03:29 – R&D synergy, geopolitical risks, and manufacturing scale
Colin discusses the ambitious technology development program, focusing on R&D spending and the synergies between various hardware components such as batteries, chips, and memory. The goal is to scale production for autonomous vehicles and humanoid robots while addressing geopolitical risks that many companies overlook.
The speaker emphasizes the importance of being paranoid about geopolitical risks, referencing Andy Grove’s philosophy that ‘only the paranoid survive.’ They stress the need to continue producing batteries, robots, and AI chips regardless of external challenges, warning that companies ignoring these risks may not survive.
The discussion highlights Tesla’s advanced lithium and cathode refineries, which use new, more efficient processes unlike any others worldwide. The speaker expresses frustration that others are not building similar facilities and urges the industry to increase such developments to support supply chain resilience.
Tesla positions itself as the largest and essentially the only lithium and cathode refinery operator in America, building these facilities out of necessity rather than choice. The company is making strategic moves to ensure its continued prosperity despite global uncertainties.
The session concludes with thanks to the participants for their questions and anticipation of future discussions in the next quarter.
Further readings: Q4 and FY 2025 Update
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