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Runtime: 10:48
0:00 Tesla Scraps Model S & X
1:00 Tesla’s Profit Plummets 46%
1:30 Tesla to Build Own Chips Amid Geopolitical Risk
2:42 EV Battery Degradation Lower Than Expected
4:38 VW Launches New SDV Architecture in China
5:59 U.S. Tariffs Cost Hyundai & Kia Billions
6:37 Toyota #1 Automaker Again
7:18 China’s Chery Eyes Underused JLR Plants
7:49 Xiaomi 1st Chinese Brand in Gran Turismo
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TESLA SCRAPS MODEL S & X IN MUSK PIVOT TO AI, HUMANOIDS
In a significant pivot away from its retail automotive business, Tesla will scrap its Model X and S next quarter. Elon Musk says the factory space in Fremont, California that makes those cars will now be dedicated to making humanoid robots, with the goal of making 1 million a year. The company will also invest heavily in robotaxis, AI, and microprocessors, on top of humanoids. Elon Musk announced Tesla will spend a staggering $20 billion in capex this year, noting the company can easily afford it because it has $44 billion in cash and equivalents. This is all part of Musk’s new vision for Tesla which is focused on what he calls an “epic future” of “amazing abundance,” where everyone earns a “universal high income.”
TESLA PROFITS PLUMMET 46%
Meanwhile, Tesla posted a significant drop in sales, revenue and profits for 2025. Sales dropped over 8%, Revenue fell 10%; operating income fell 38% and net profits plummeted 46%. But investors shrugged off the bad news and focused on the future. As a result, Tesla’s stock was up almost 2% in pre-market trading, but we’ll have to watch how it goes for the full day.
TESLA TO BUILD OWN CHIPS AMID GEOPOLITICAL RISK
And here’s some of the other nuggets that came out of the earnings call.
* Tesla will start Cybercab production in April and Musk says that over time it’ll make 5 to 10 times more Cybercabs than all its other vehicles combined.
* Cybercabs will also come in several shapes and sizes.
* Tesla will no longer concentrate on vehicle sales, instead it will focus on how many miles of travel it captures.
* The long-awaited Roadster will “hopefully” go into production in April.
* The Cybertruck assembly line in Texas will be converted to make fully autonomous vehicles and Musk suggests those autonomous vehicles will be cargo vehicles for local delivery in cities.
* Optimus 3 production will not start until the end of this year.
* And lastly, Tesla will build a “terrafab” in the U.S. to make its own computer chips to protect supplies in the future. Musk warns that people are “underweighting” the geopolitical risks that the world faces in a couple of years. And we sure would like to hear Elon expound on what he means by that.
THE 15-YEAR BATTERY? DATA PROVES EV DEGRADATION IS LOWER THAN EXPECTED
One of the things holding back some people from buying an EV is concern over battery life. But according to a new study from Recurrent, that shouldn’t be a worry. Using its telematics tools, over the last five years Recurrent has documented more than 1-billion miles of real-world driving, along with charging data from over 50,000 vehicles. And it shows battery replacements are becoming rarer. Only 2% of EVs built between 2017 and 2021 needed a new battery. And for EVs made after 2022, the number drops to just 0.3% of cars. However, those numbers don’t include recalls. But moving to degradation, an EV from 2012 with more than 150,000 miles still retains 81% of its range, while an EV from 2023 still has 91% of its range. That difference is thanks to improvements in battery technology and as a result, Recurrent says it doesn’t expect new EVs to have any issues for 15 years.
CAN CHINA SAVE VW? NEW CEA ARCHITECTURE CUTS DEVELOPMENT COSTS BY 50%
Volkswagen’s own division, CARIAD, failed at developing a next-gen electronic architecture for the company, which is why it invested billions into Rivian and also teamed up with XPeng in China. Now, just a year and a half from the first concept, VW is launching its first software defined vehicle that’s based on its new CEA or China Electronic Architecture. The model, called the ID. UNYX 07 is a small crossover, but the CEA will also spread to four other A- and B-segment models from VW’s various Chinese joint ventures this year. And while some automakers are only developing their software defined architectures for EVs, Volkswagen will use its for ICE, hybrid and fully electric vehicles. On top of going from concept to production in 18 months, which is the fastest that VW has ever developed a new electronic architecture, CEA also allowed VW to slash overall vehicle development cycles by up to 30%, to reduce the number of control units by around 30% and cut new model development costs by up to 50%. Customers will benefit from things like faster computing, advanced AI functions, hands-free driving and full vehicle over-the-air updates.
TRUMP’S TARIFF THREAT: HYUNDAI & KIA FACE $5.8B HIT AS TRADE WAR ESCALATES
Hyundai and Kia were hit hard by U.S. tariffs last year. Hyundai says the tariffs cost it $2.8 billion, while Kia says tariffs cost it $2.3 billion. And it’s possible it could get worse this year. Earlier this week, President Trump threatened to raise tariffs on South Korean imports from 15% to 25% because Korea’s parliament still hasn’t approved a trade deal the two countries reached last year. According to Bloomberg Intelligence estimates, raising the tariffs by 10% could cost Hyundai and Kia another $3 billion this year.
TOYOTA CRUSHES COMPETITION: 6-YEAR STREAK AS WORLD’S TOP-SELLING AUTOMAKER
Toyota is expanding its global sales lead over the Volkswagen Group. For the sixth year in a row, Toyota is the top automaker in the world. It sold 11.3 million vehicles last year, up 4.6% from the year before, including its subsidiaries Daihatsu and Hino. Meanwhile, the VW Group sold 9 million vehicles in 2025, down 0.5%. Toyota is also well ahead of its Japanese rivals. Honda’s sales tumbled 7.5% last year to 3.5 million units. And Nissan sold more than 3.2 million vehicles globally last year, down 4.4%.
CHINA’S CHERY EYES JLR PLANTS AS UK AUTO OUTPUT HITS 70-YEAR LOW
Automotive manufacturing in England fell to 738,000 vehicles, its lowest level since 1952. And now comes reports that Chinese automaker Chery is interested in using open capacity at Jaguar Land Rover plants to make cars. JLR has three assembly plants in the UK, and with Jaguar aiming to move upscale at much lower sales volume, it will definitely have open manufacturing capacity.
XIAOMI MAKES HISTORY: THE FIRST CHINESE CAR ARRIVES IN GRAN TURISMO 7
For the first time ever Chinese cars will be featured in a Gran Turismo video game. The Xiaomi SU7 Ultra is now available in Gran Turismo 7, officially making it the first Chinese car in the game. But the Yangwang U9 Xtreme from BYD will also be available at some point as well. We think it’s a significant step for Chinese automakers that will help give them more recognition worldwide, especially with younger generations who will now grow up with Chinese cars as part of the normal landscape.
And before we go, don’t forget to tune into Autoline After Hours today. John and Gary want to get into Chinese cars going to Canada, the nearly invisible Detroit Auto Show and the future of automotive interiors. Catch the action LIVE today on our website or YouTube channel at 3PM EST. But that’s a wrap for this show and I hope to see you later today.
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By “the geopolitical risks that the world faces in a couple of years,” Elon might be thinking of the likelihood of China taking over Taiwan, with Trump almost giving them a green light to do that, with the invasion of Venezuela and threats against Greenland. More than 60% of silicon ICs come from Taiwan, and a Chinese takeover could greatly disrupt the supply chain to the rest of the world. Maybe that’s why Elon wants to get into the IC business.
I’m not surprised that Tesla are dropping Models S and X, but I’m sorry to see it. Model S was, by far, my favorite Tesla, because it looks pretty good, has some real controls, and is a hatchback. It is pricey, though, compared to 3 and Y.
This is all part of Musk’s new vision for Tesla which is focused on what he calls an “epic future” of “amazing abundance,” where everyone earns a “universal high income.”
Lies, lies, lies. Why is he part of the oligarchy that is building compounds and cities just for billionaires if the future will be some “amazing” panacea?
As if he and other Billionaires just want to give money away for “universal income.”
While the headline did not include this, the story seems to indicate that CyberTruck will also be going out of production soon. Looks like Tesla will use that plant and possibly the CyberTruck platform to build commercial vehicles. Not a bad idea. The CyberTruck has become an international joke and has tarnished Tesla’s reputation.
That VW image looked pretty attractive and interesting. Let’s hope they continue down that road and replace the boring ID models with more interesting vehicles along the lines of this concept.
Jake, exactly. I don’t see Elon doing much to create an “amazing abundance,” except for himself and maybe other billionaires. I don’t even see him using his money to do good, as Bill Gates has, or Andrew Carnegie did in an earlier era.
Seems Tesla is preparing to be a mobility and service company rather than an automotive company. Self driving taxis and robots probably makes more sense as the desire for personal EVs has been satisfied. Those that wanted them got em and maybe Elon sees the sales have likely plateaued. However EVs make sense as inner city taxis and some of the commercial applications. Certainly chip manufacturing is a promising business.
No comment on that the day the last Tesla S&X will be available is the day the new Roadster will be available. Odd
I’ll believe the Tesla Roadster when/if I see it.
@Sean McElroy – Why no mention of Ontario premier Doug Ford calling a press conference to urge all Canadians to boycott any of the Chinese EVs that Carney has agreed to import? I would think this a significant thing and he’s really taking it to Carney in the press. He says, correctly, that any CCPEV purchase is helping to drive Canada’s auto sector out of work. Wow, sounds like Trump and also, you know, common sense. I didn’t think Ford had any so I’m shocked. Good for him.
Also regarding Tesla, Musk said recently that Tesla will not be able to fend off the Chinese in the EV space since they are subsidized by the CCP. They don’t have to turn a profit and therefore can eventually dominate any market and afterward crank prices once all the competition is decimated. He’s also a futurist and that explains why Tesla dropped these models and just plowed billions into the driverless taxi space, humanoid robots, and AI ( which he believes will eliminate most jobs; hence the basic income.) As an example he said robots will be the best surgeons within 3-5 years so medical school may not be a wise investment anymore.
On Taiwan: Ukraine learned the hard way that security guarantees made by one administration may not mean much to another years down the road. Obama did nothing about the Crimean invasion and annexation. Biden did little about the Donbass invasion even when the build up took weeks and the whole world saw it coming on satellite images. To be fair, Taiwan does have the chip sector, which presents more strategic interest to the US than anything Ukraine had. But would the US public support a hot war with China, loss of our blood and treasure, over Taiwan? Lots of doubt there and domestic politics is always a huge factor. There’s a reason the US has put billions into ramping up capacity and capabilities for domestic chip production…
Daily, Donald J. Trump is the one costing Canada jobs, both with “Detroit 3” companies, and with Honda and Toyota. The few Chinese cars coming to Canada will show if people will buy them over Tesla and others. If so, the Chinese companies are likely to set up factories in Canada, maybe buying them from GM, Ford, and Stella.
Robots are currently widely used for surgeries. I’ve had two surgeries using them. They are operated by highly skilled doctors, though, not autonomously. Check davinci robot surgery.
Kit,
Tesla announced a while back that the move to USA production chips was not about Taiwan, but more about rare earth supply chain management. Taiwan is susceptible to china restricting supply making supply chain disruptions a concern. Sourcing chips in the USA using rare earths from non-china controlled locations guarantees the supply chain will not see disruptions. This is the same thing that GM announced prior to Tesla and for the same reasons.
Silicon IC production equipment comes from all over the world. Will Trump have big tariffs on the equipment Elon will need for his wafer fabs?
Kit, I’m just reporting what Premier Ford is saying and his reasons. He’s Canada first, as he should be, and he dislikes Trump but is not sparing his wrath on Carney over the China EV deal. It should be reported here, I think.
Elon was saying that AI will be doing the surgeries through robots. No humans involved.
If you really want to depress yourself, do a search on YouTube for interviews of the various researchers and CEOs who are spearheading AI. For a good one, search “The AI safety Expert Roman Yampolskiy.” I’ve watched many and they openly say that they can’t guarantee in any way that they can control it. There will be 99% unemployment within 5-7 years. They fear the implications of societal collapse and a potential real world Terminator scenario. And yet they push ahead undeterred in a new arms race because even if they stop, China won’t. It’s truly insane.
Trump, not China, is responsible for GM’s abandoning Ingersoll and cutting in Oshawa, and Stella’s abandoning Brampton. Stella Windsor is still up in the air, depending on how much Canadian and non-US export market there is for Pacifica.
You can see that Elon is strictly an early adopter guy; be the first and brashest in a new industry, then when others start to catch up, switch fields. Keep lots of balls in the air to see what’s going to win.
He’s not a car guy. If he was, he would have updated more often and iterated the styling and options as he has with the chassis (gigacastings) and electricals.
He’s just not interested when competition catches up and everyone is down in the trenches. Unusual in the auto industry because it’s all in the trenches.
The auto industry has benefited enormously from him. He shook up the status quo and showed that it’s possible to do things differently.
Having said all that, I think he is personally reprehensible and I will never purchase anything he is involved with.
In the real world, I have been looking at 12 year old tesla vehicles for sale on marketplace. Most need a battery. Some with low miles some with high miles. They are cheap though but of course they are as they need a battery. It gets worse when you look at 12 year old Nissan Leafs. There is not 1 single 12 year old leaf out there with a usable range because none have a good battery. Statitistics can be whatever you want them to be, I prefer to see what I can physically buy and nothing is matching these statistics.
Yes the report that used EVs are cheap and depreciate more than an ICE makes sense. However suggesting that with an influx of used EVs hitting the market soon could increase prices seems unlikely. When you flood the market with more choices the prices typically drop even more as competition for buyers to find a good used car becomes easier. Back to the old supply and demand. Maybe the low price will increase demand but more supply will counter that so I’d say it’ll stay even or maybe drop even lower.
How can the Cybertruck go out of production? Based on current performance I didn’t think it ever really went into production.
LOL