Elon Musk has long maintained that Tesla is not a car company, and recent developments suggest he may finally be turning that vision into reality. After its latest earnings report, Tesla’s strategic pivot toward AI, robotics, and software services has become undeniable. Musk announced that Tesla will discontinue production of its Model S and Model X to repurpose the factories for building the Optimus humanoid robot. This shift underscores the company’s growing focus on autonomous systems and artificial intelligence, rather than traditional vehicle manufacturing. Alongside this, Tesla confirmed a $2 billion investment in Musk’s AI startup xAI and signaled openness to further AI collaborations. Despite beating Wall Street’s expectations, Tesla reported its first-ever annual revenue decline and a 46% drop in profits. Car sales fell 11% in the last quarter, marking the second consecutive year of declining EV sales. Still, investors responded positively, pushing Tesla’s shares up nearly 3% after hours—evidence that market confidence now rests less on vehicle sales and more on Tesla’s future in robotics and AI. Musk reiterated his belief that autonomous driving will soon dominate transportation. “The vast majority of miles traveled will be autonomous in the future,” he said, predicting that less than 5% of driving could involve human control, possibly as low as 1%. This vision is central to Tesla’s new business model. To support this transition, Tesla has made significant changes to its software offerings. It has removed the one-time $8,000 purchase option for Full Self-Driving (FSD), making it subscription-only at $99 per month. The company also eliminated its basic Autopilot tier, which was previously free on most vehicles, replacing it with a more limited cruise control feature. These moves, typical of tech companies, aim to drive long-term revenue from software and services. While these changes sparked backlash from customers, analysts see them as strategic. Dan Ives of Wedbush Securities noted that the goal is to monetize FSD and build a recurring revenue stream. Currently, only 12% of Tesla owners have purchased FSD, though nearly 70% of those purchases were one-time fees. The push for subscriptions is critical for Musk’s $1 trillion pay package, which hinges on reaching 10 million active FSD subscribers by 2035. The real test lies in Tesla’s robotaxi and Optimus initiatives. The Cybercab, a fully autonomous vehicle without pedals or a steering wheel, is set to begin production in April. Tesla’s robotaxi service, already operating in Austin with around 50 vehicles, is expected to expand to “a quarter to half” of the U.S. by year-end, pending regulatory approval. Analysts like Tom Narayan of RBC Capital Markets believe that nearly 75% of Tesla’s long-term valuation now depends on robotics and autonomy, not car sales. Ives estimates that 80% to 90% of the company’s future value lies in these areas. He expects meaningful revenue from robotaxis to start only in 2027, with 2026 focused on scaling operations across about 30 cities. The transition won’t be cheap. CFO Vaibhav Taneja said Tesla plans to spend over $20 billion this year on new production lines and AI infrastructure. Meanwhile, Tesla’s EV business faces mounting challenges. The end of the U.S. $7,500 tax credit has slowed the EV market, while Chinese rivals like BYD are gaining share globally. AutoForecast Solutions’ Sam Fiorani warned that if Tesla’s auto business declines faster than its new services grow, the transition could be rocky. But he added that Musk sees the car as a legacy product—just a stepping stone to a future built on autonomous software, hardware, and robotics. In short, Tesla is no longer just a carmaker. It’s becoming a tech company—defined by AI, robotics, and services—whether the market is ready or not.