By Linet Amuli - Reporter
Kenya, 29 January 2026 - Tesla has taken a major step deeper into artificial intelligence by committing $2 billion to xAI, the technology company founded by its chief executive Elon Musk.
The investment, finalised in mid-January 2026 through the purchase of xAI’s Series E preferred shares, strengthens the link between two of Musk’s most ambitious ventures.
For Tesla, the move reflects a strategic transformation from a car manufacturer into an AI-driven mobility and robotics company. Investors increasingly value the firm not just for vehicle sales but for its vision of autonomous transport and self-driving software , a model that could eventually influence how mobility systems evolve in emerging markets, including Africa.
Tesla says its purpose-built autonomous vehicle, the Cybercab, is still scheduled to enter production later this year.
Unlike conventional cars, the Cybercab has no steering wheel or pedals and is designed purely for ride-hailing services. The vehicle will operate alongside Tesla’s Model Y in its robotaxi fleet, and private buyers will also be allowed to purchase it.
Musk claims that fully autonomous vehicles could be operating across large parts of the United States by the end of 2026.
However, similar predictions in the past have not been met, which has made investors cautious. At present, Tesla’s robotaxi trials are limited to Austin, Texas.
For Africa, these developments could be significant in the long term. Several African cities already rely heavily on informal transport networks. Autonomous taxis, if adapted to local conditions and regulations, could one day reshape urban mobility in fast-growing metropolitan areas such as Lagos, Nairobi and Johannesburg.
Tesla also announced it will discontinue sales of its premium Model S and Model X vehicles. Factory space previously used to build those models will now be converted to support production of humanoid robots under its Optimus project.
This signals a broader bet on robotics and software rather than traditional car manufacturing. Tesla is effectively asking shareholders to believe that future revenue will come from autonomous driving systems and robotic labor before car sales rebound.
The company’s core vehicle business has been under pressure. Competition from cheaper models, the end of U.S. tax incentives, and customer backlash linked to Musk’s political views have weighed on demand. Tesla’s total revenue fell in 2025, marking its first annual decline in years.
Despite this, Wall Street expects vehicle deliveries to recover modestly in 2026. Tesla has defended market share by cutting prices and offering lower-cost versions of popular models.
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In the last quarter of 2025, Tesla reported earnings that slightly exceeded analyst expectations, although overall profit dropped sharply. Its vehicle margins improved thanks to cost reductions, even as sales declined.
One of the company’s strongest performers was its energy division. Revenue from battery storage and power systems surged to a record level, driven by demand for grid-scale batteries that support renewable energy. This segment is particularly relevant to Africa, where energy storage is becoming critical for solar and wind projects as countries seek to stabilize electricity supply.
Tesla plans to spend more than $20 billion in capital expenditure in 2026 , more than double the previous year’s level. The funds will support production of the Cybercab, Optimus robots, Semi trucks and the long-delayed Roadster sports car.
Musk has warned that global shortages of memory chips could slow Tesla’s plans, as major technology companies race to build AI data centers. He has even suggested that Tesla may need to develop its own chip manufacturing capacity to secure supply.
Regulation remains another obstacle. Current U.S. safety standards require vehicles to have steering wheels and pedals, which the Cybercab lacks. Approval timelines for fully autonomous driving remain unclear.
Meanwhile, Musk’s enormous incentive package , tied to company performance and valuation milestones , has reassured investors that he remains committed to Tesla’s long-term vision.
Tesla’s pivot toward AI and robotics highlights trends that African governments and startups are watching closely: automation, electric transport, and energy storage. While robotaxis may still be years away from African roads, the technologies behind them , battery systems, AI navigation, and fleet management , could play a role in future smart-city projects.
As African cities grapple with congestion, pollution and informal transport systems, Tesla’s experiment with autonomous vehicles offers a glimpse of how mobility could eventually evolve , provided infrastructure, regulation and affordability can align.
