Amid declining conventional automobile revenues, Tesla this week signalled a dramatic transformation: from an electrical car producer to a networked ecosystem of autonomous autos, humanoid robots, power belongings, and AI-driven companies.
The corporate’s This autumn 2025 earnings name offered a front-row view of this shift, with Elon Musk, CFO Vaibhav Taneja, and different executives outlining a imaginative and prescient the place Tesla operates as a lot as an IoT specialist because it does an automaker.
Tesla’s monetary outcomes replicate the stress of this transition. Annual income fell 3% in 2025, whereas quarterly income plunged 61%. The Mannequin S and Mannequin X are being retired, marking an finish to legacy, low-volume traces in favour of high-volume autos just like the Mannequin 3 and Y, in addition to Tesla’s autonomous fleet initiatives.
“It’s time to mainly deliver the Mannequin S and X applications to an finish with an honourable discharge as a result of we’re actually transferring right into a future that’s primarily based on autonomy,” Musk advised buyers. “In case you’re thinking about shopping for a Mannequin S and X, now can be the time to order it as a result of we anticipate to wind down S and X manufacturing subsequent quarter and mainly cease manufacturing.”
The transition goes far past vehicles. Tesla introduced that its Fremont manufacturing unit, which produced the S and X, will grow to be a hub for Optimus humanoid robots.
Musk set a goal of 1 million items per yr: “As a result of it’s a fully new provide chain, it’s simply — there’s actually nothing from the present provide chain that exists in Optimus. Every little thing is designed from physics first rules,” he mentioned.
“[It is a] general-purpose robotic that may be taught by observing human behaviour, so you possibly can show a activity or verbally describe a activity or present it a activity, even present it a video and it is going to be ready to try this activity.”
Early deployment of Optimus is already underway, although Musk cautioned that materials manufacturing gained’t scale till the top of the yr.
Underneath Musk’s plans, every robotic will grow to be a linked, data-generating node, studying from people and feeding data again to Tesla’s AI methods through its AI chatbot.
“In case you’re managing a big workforce of Optimus robots to construct a manufacturing unit or construct a refinery… you want… an orchestra conductor,” Musk mentioned. “And so then Grok can be form of the orchestra conductor for the Optimus robots to construct that — hypothetically — and it may not be hypothetical sooner or later.”
This orchestration of robots and autos sits squarely inside an IoT framework.
Tesla’s autonomous autos are one other part. Through the name, Musk identified that totally unsupervised rides are already underway in Austin.
“It’s 100% unsupervised and FSD is 100% unsupervised — I imply, we clearly have vehicles working with nobody in them and no security monitor and no observe automobile or something like that in Austin proper now,” he mentioned.
Musk mentioned he anticipated dozens of main cities to have autonomous autos by year-end, pending regulatory approval. He predicted that “most likely lower than 5% of miles pushed will probably be the place any individual is definitely driving the automobile themselves sooner or later, perhaps as little as 1%.”
Tesla’s method treats every car as an IoT node: continuously accumulating information, enhancing software program, and producing income by means of a shared fleet mannequin.
“[It’s] a chance for lots of shoppers to earn extra by lending their automobile to the fleet than their lease price to Tesla… it’s fairly a superb situation,” Musk added.
Through the name, Lars Moravy, Vice President of Automobile Engineering, was equally bullish in regards to the scale of the chance: “We’d anticipate over time to make way more Cybercabs than all of our different autos mixed… 90% of distance being travelled is 1 or 2 folks… so it will imply that long-term Cybercab — we’d make a number of occasions extra Cybercabs per yr than all of our different autos mixed.”
Tesla’s IoT pivot additionally extends to power. The corporate is connecting power era, storage, and consumption right into a software-optimised community — primarily, an IoT power ecosystem.
Tesla Vitality income reached $12.8 billion in 2025, up 26.6% year-on-year, pushed by the corporate’s high-density utility-scale lithium-ion battery power storage system (BESS) Megapack and rechargeable dwelling battery system Powerwall.
“The photo voltaic alternative is underestimated,” Musk added. “We expect one of the simplest ways so as to add vital functionality to the grid is… photo voltaic and batteries on Earth and photo voltaic in area. In order that’s why we’re going to work in direction of getting 100 gigawatts a yr of photo voltaic cell manufacturing integrating throughout all the provide chain from uncooked supplies all the best way to completed photo voltaic panels.”
Essential to this ecosystem is Tesla’s concentrate on AI and chip design. Musk mentioned he personally oversees the AI5 and AI6 chip initiatives, dedicating Saturdays and a portion of Tuesdays to their growth. “Finishing the AI5 chip design… is arguably the primary most crucial factor to get carried out,” he mentioned. “If Optimus is totally ineffective with out an AI chip… it’s not just like the vehicles we will put steering wheels and pedals in… Optimus gained’t even be capable of… sit there with out an AI chip.”
The corporate mentioned it’s even considering its personal home chip fabrication facility, or “Terafab,” to mitigate geopolitical danger and safe reminiscence and logic for future AI workloads.
“If we don’t do the Tesla Terafab, we’re going to be restricted by provider output of chips,” Musk mentioned. “And perhaps reminiscence is an excellent greater limiter than AI logic… presently there aren’t any superior reminiscence fabs at scale in the USA. They’re zero, actually zero.”
Autonomy and robotics are tightly linked to Tesla’s income technique. Tesla is redefining the normal automobile enterprise as a software-centric, IoT-driven service.
As Taneja defined, the corporate is transitioning FSD to a subscription mannequin, which can initially scale back margins, however in the end transforms autos into recurring-revenue platforms. “Transportation, as we all know, is altering… autonomy software program would be the driver for development from now,” he mentioned.
And with competitors from China rising, the corporate says that these are issues it must just do to remain forward. “All this comes out of necessity. It’s not that we wish to do it. It’s simply we’ve no alternative,” Taneja advised buyers.
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