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Jan 28 (Reuters) -
Tesla (TSLA.O) said on Wednesday it had agreed to invest about $2 billion in Elon Musk’s artificial intelligence startup xAI, deepening ties between the companies as the automaker pitches itself as an autonomy and robotics-driven company.
Tesla’s shares were up about 2% in extended trading.
Musk has framed AI technology as central to his broader push to develop artificial intelligence that could support the automaker’s self-driving and robotics ambitions.
The Austin, Texas-based company reported revenue of $24.9 billion for the three months ended December 31, beating analysts’ average estimate of $24.79 billion, according to data compiled by LSEG.
Wall Street expects the company to deliver 1.77 million units in 2026, representing an 8.2% increase, according to Visible Alpha data.
Tesla’s vehicle business has been under strain as rivals roll out newer models, often at lower prices. A U.S. tax incentive for electric vehicles has also ended, and Musk’s far-right political rhetoric have alienated some customers.
Investors have increasingly focused on Musk’s push into self-driving technology and robotics, with many looking for proof points that the autonomy story is moving from promise to product.
Tesla has leaned on lower-priced “Standard” versions of its best-selling Model 3 and Model Y to attract more price-sensitive buyers, a strategy analysts expect will play a key role in 2026 deliveries growth even if it pressures margins.
Some analysts view it as a deliberate trade-off to expand the vehicle fleet that can later generate higher-margin revenue from software.
Its energy generation and storage business has proven to be a notable bright spot. Tesla said its energy-storage deployments rose about 29% to a record 14.2 gigawatt-hours in the fourth quarter, benefiting from sustained demand for grid-scale batteries used to support renewable power and stabilize electricity networks.
Investors have been looking for signs that the Full Self-Driving (FSD) and robotaxi rollouts are advancing, including updates on regulatory progress and clearer timelines for the purpose-built Cybercab, which is designed without a steering wheel or pedals.
Musk has repeatedly set ambitious timelines for robotaxis - saying they would reach half of the U.S. population by the end of 2025 - before later narrowing that goal to deployment in the top eight to 10 metropolitan areas. The company has since missed those targets and provided no updated timelines.
He has continued to predict rapid progress for Full Self-Driving, a vision he has outlined for nearly a decade, but has not provided firm dates for regulatory approval or broad unsupervised deployment.
Musk said last year that Tesla aimed to begin production of its purpose-built Cybercab in April 2026, describing it as a fully autonomous vehicle without a steering wheel or pedals. Cybercabs will be added to its robotaxi service that currently relies on Model Y vehicles running a version of Full Self-Driving and will also be available for consumers to buy.
Last week, he said initial production of the Cybercab robotaxi and the humanoid robot Optimus would be “agonizingly slow” before accelerating over time, leaving investors still waiting for a more detailed timeline and production forecast.
Tesla’s shares rose about 11% in 2025, their slowest annual gain in three years, yet the company, at about $1.5 trillion, remains the world’s most valuable automaker by a wide margin.

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Tesla has announced a $2 billion investment in Elon Musk's AI startup, xAI, enhancing their collaboration as Tesla focuses on autonomy and robotics. Following the news, Tesla's shares rose by 2%. The company reported a revenue of $24.9 billion for Q4, surpassing expectations. Despite challenges from competitors and the end of EV tax incentives, Tesla aims to boost deliveries through lower-priced models. Investors are keen on advancements in self-driving technology and the upcoming Cybercab, although timelines for these developments remain uncertain. Tesla remains the most valuable automaker globally, valued at $1.5 trillion.

- Tesla has announced a $2 billion investment in Elon Musk’s AI startup xAI, enhancing collaboration as it positions itself as a leader in autonomy and robotics.  
- The company reported Q4 revenue of $24.9 billion, exceeding analyst expectations, while aiming to deliver 1.77 million vehicles in 2026 amid competitive pressures and changing market conditions.  
- Despite setbacks in self-driving technology timelines, there is optimism around Tesla’s energy storage growth and the future rollout of the Cybercab, a fully autonomous vehicle expected to begin production in April 2026.

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Tesla to invest $2 billion in Musk's xAI startup