Is Tesla about to shift its business focus from electric vehicles (EVs) to humanoid robots? Hit by Chinese rivals like BYD, the EV maker reported its first-ever annual drop in revenue, down 3% to $94.8 billion in 2025. Its chief Elon Musk has said it will quit rolling out its pricey S and X models.
Musk’s self-confessed love of the letter ‘X’ makes the latter’s withdrawal a surprise. But then, business logic must prevail. Tesla’s cheaper Y and 3 models made up 97% of the 1.6 million EVs it delivered last year. Its S and X factories will be repurposed to crank out Tesla’s AI-run robot Optimus.
This pet project aims to fulfil the sci-fi fantasy of a bipedal machine that moves around and acts like a human. Since the idea is to ultimately have it serve as everything from househelp to factory worker, Musk wants to begin with a yearly capacity of 1 million units.
How useful or clunky Optimus proves could shape not just Tesla’s future, but possibly the labour market’s as well. For now, the real story is China’s rise as an EV force, not Musk’s bet on AI-robot employment. Yet, as India’s Economic Survey advises, we must track trade-offs between capital and labour as we try to solve “the puzzle” of AI’s impact on jobs.