NEW YORK (AP) — Tesla’s annual profit plunged to its lowest level since the pandemic five years ago as it lost the title of the world’s biggest electric vehicle maker to a Chinese rival and boycotts hammered sales.

The EV company run by Elon Musk reported Wednesday that net income last year dropped 46% to $3.8 billion. It was the second year in a row of steep declines. The drop came despite the introduction of cheaper models and Musk's promise to remain laser-focused on the company after a foray into U.S politics.

Still, Tesla investors have kept the faith in Musk. The stock is up 9% in the past year.

Musk has been urging investors to focus less on car sales and more on what he considers a bright new artificial intelligence future of robotaxis ferrying millions in cars without drivers, or even steering wheels, and robots watering plants and taking care of elderly parents.

On a conference call, Musk underlined that shift by announcing Tesla had decided to close down production of two older car models, S and X, in the second quarter and convert a Fremont, California, factory to produce its Optimus robots instead.

Making those future ambitions a reality will take money. Officials said Tesla would spend big on AI and others new projects this year, more than doubling capital expenditures to $20 billion. And the company revealed it had recently invested $2 billion in the artificial intelligence company xAI, raising potential conflicts of interest issues as Musk holds big stakes in both companies.

That AI business, known for its Grok AI assistant, has courted controversy for echoing Musk’s views on race, gender, and politics and, recently, producing nonconsensual sexualized deepfake images.

Tesla's fourth quarter profit also fell sharply, dropping 61% to $840 million, or 24 cents. But excluding one-time charges, net income totaled 50 cents per share, compared to analysts' forecasts of 45 cents.

“They’ve got aging product that is less and less competitive as other manufacturers come out with new models, then there is the general brand destruction," said Telemetry analyst Sam Abuelsamid. "Musk‘s involvement in politics has turned off customers.”

There were hopeful signs in the report, too. Tesla's energy storage business, though small compared to the car sales, posted strong numbers last quarter with revenues surging 25% to $3.8 billion reflecting demand from new datacenters sucking up energy around the U.S.

Tesla's gross profit margins were another bright spot, leaping to 20% last quarter from 16% a year ago.

“Tesla’s ability to show improving profitably was a surprise,” said Morningstar analyst Seth Goldstein.

Goldstein said he was also encouraged by plans outlined in Tesla’s earnings report to roll out robotaxi service in Houston, Miami and five other cities in the first half of this year. In the conference call, the company also said that it would begin producing its two-seated Cybercab with no wheels or pedals in the same time frame.

But Musk is well know for making promises with deadlines he never meets.

Musk said that European regulators would approve its partial self-driving software in the first three months last year, a potential big boost to Tesla sales there. But that hasn't happen yet. And a strong revival in sales Musk heralded midway through the year also failed to materialize.

The robotaxi program has progressed slowly, which Musk told investors is due to Tesla being extremely cautious to avoid mishaps. Tesla promised robotaxi rides without anyone driving the car, but until recently the cars had supervisors inside to grab the controls in case something went wrong. Tesla has now removed the safety drivers in Austin where it launched the service in June.

For some on Wall Street that is enough to keep pushing the stock up.

One of Wall Street’s most bullish analysts, Dan Ives of Wedbush Securities, expects robotaxis will be in more than 30 cities by the end of this year, and that Tesla will capture 70% of the global market for self-driving cars in a decade.

Ives and others are also encouraged that Musk has shifted his focus back to the company after spending months as head of a government cost-cutting team in Washington.

But it’s not clear his attention will remain as undivided in the new year. He has plans to take his rocket company SpaceX public, possibly in June, in what many expect to be a blockbuster IPO that make him the world’s first trillionaire — but also possibly distract him.