By Akash Sriram and Abhirup Roy Jan 28 (Reuters) - Tesla said on Wednesday it will invest $2 billion in CEO Elon Musk's artificial-intelligence company xAI - and that production plans for its Cybercab robotaxi were on track for this year.

Tesla Inc. plans $20 billion of spending this year to streamline its electric-vehicle lineup and shift resources toward robotics and AI, part of a sweeping set of changes pushing the company further from its roots as an automobile manufacturer.

In its earnings report on Wednesday, Tesla said it invested $2 billion in xAI, Elon Musk's artificial intelligence startup.

As a result, total revenues for 2025 only fell by 3 percent. But Tesla saw a 38 percent drop in income from operations, and its expenses went up by 23 percent. As a result, the company’s once-envied profit margin was just 4.9 percent for the year, down from 7.2 percent last year. (In 2022, Tesla had a 23.8 percent profit margin.)

Tesla just reported its second consecutive year of declining revenue and profits, further complicating Elon Musk’s $1 trillion effort to transform his company into a leader in AI and robotics. Meanwhile, the global EV market continues to grow, seemingly in spite of the pioneering company’s setbacks.

The automaker also said it would invest $2 billion in xAI, the artificial intelligence company controlled by its C.E.O., Elon Musk, and stop making the two oldest cars in its lineup.

J.B. Straubel’s Redwood Materials has secured some high-profile backers as AI makes energy storage more critical.