Houston XR training company lands $5.8M contract with Air Force

taking flight

HTX Labs has been awarded a contract with the U.S. Air Force to develop a virtual AI-powered classroom for workers who maintain the Boeing KC-135’s F108 engine. Photo via Getty Images.

The U.S. Air Force’s AFWERX innovation arm has picked Houston-based HTX Labs to provide AI-enabled immersive training for workers who maintain Boeing KC-135 refueling tankers.

HTX Labs, an extended reality (XR) company and provider of immersive training programs for U.S. armed forces, will receive as much as $5.8 million in military funding for this project.

The new initiative comes on the heels of HTX Labs completing the second phase of a virtual KC-135 maintenance training program in partnership with Mildenhall, a Royal Air Force station in England. HTX Labs received Small Business Innovation Research (SBIR) funding for the second-phase project.

Under the new initiative, part of its EMPACT training platform, HTX Labs will develop a virtual AI-powered classroom for workers who maintain the KC-135’s F108 engine. In conjunction with this project, HTX Labs will collaborate with the Maine Air National Guard’s 101st Air Refueling Wing Maintenance Squadron on improving EMPACT.

Major Ryan Wing of the Maine Air National Guard says KC-135 maintenance workers “have limited opportunities to perform some of the more complex aircraft and engine repairs in a training environment. Providing immersive training to our warfighters is essential to ensuring mission readiness.”

In January, HTX Labs tapped Brian Reece as vice president of strategic accounts for the Air Force. In this role, he oversees HTX Labs’ relationship with this military branch. Reece is a retired Air Force colonel.

In 2022, Dallas-based Cypress Growth Capital invested $3.2 million in HTX Labs, which was founded in 2017.

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HTX Labs will supply immersive training technology and content to the Air Force and its Space Force military partner. Graphic courtesy of HTX Labs

Houston VR training startup wins $90M contract with Air Force, Space Force

big win

HTX Labs has won a three-year, $90 million contract to provide immersive training capabilities for the Air Force and Space Force.

Under the new contract, which is set to end in September 2026, HTX Labs will supply immersive training technology and content to the Air Force and its Space Force military partner. The Houston company says the contract culminates more than five years of collaboration with the Air Force.

HTX Labs’ EMPACT cloud-based immersive training platform enables instructors and curriculum developers to create immersive lessons within EMPACT’s digital classrooms. HTX Labs says the Air Force and Space Force will retain full ownership of digital assets that are produced and will allow in-house updates of training materials.

EMPACT’s training lessons can be consumed on tablets, laptops, and virtual reality (VR) headsets.

“HTX Labs is honored to have the confidence of the Air Force per this contract that allows us to continue our collaboration with Airmen and Guardians to deliver immersive training capabilities for the warfighter,” Scott Schneider, CEO and head of growth for HTX Labs, says in a news release.

The ties between HTX Labs and the Air Force are strong.

In May, HTX Labs said it had been awarded a Small Business Innovation Research (SBIR) contract for the Tech Training Transformation Cloud project at the Air Force. The project will let airmen access, create, share, and deliver government-owned digital assets, models, simulations, and content for technical training.

Two months later, HTX Labs said retired Air Force Gen. Craig “Pulse” Wills had joined the company as a strategic adviser. During his Air Force tenure, Wills oversaw a makeover of flight training, including the introduction of extended reality (XR) training and adult learning programs.

“HTX Labs was one of the early pioneers of our Pilot Training Next effort, and they’re dedicated to meeting the needs of our warfighters,” says Wills. “Our young military members are the treasure of this nation. We owe them the very best training and tools available to make them lethal, proficient, and prepared to defend this nation and our way of life.”

Founded in 2017, HTX Labs received $3.2 million in royalty-based equity funding last year from Dallas-based Cypress Growth Capital.

Here are three of the latest updates on new hires and promotions from these Houston organizations. Photos courtesy

3 Houston organizations announce strategic appointments

short stories

It's been a busy year so far for Houston organizations — three of which have made new appointments to their leadership.

In this round up of movers and shakers in Houston innovation, a venture capital firm names its newest principal, an astronaut gets a leadership role here at ground control, and a VR studio snags a leader to steer its growth.

Joe Acaba, chief of NASA's Astronaut Office at Johnson Space Center

Joe Acaba was promoted to a new role and will be responsible for crew assignments for future spaceflight missions. Photo via NASA

NASA tapped Joe Acaba as its chief of the Astronaut Office based in Johnson Space Center in Houston. He's served on multiple spaceflights and is a former U.S. Marine and former educator. According to NASA, he's the first person of Hispanic heritage selected to lead the office.

Acaba replaces Drew Feustel, who spent two years as deputy chief and has been acting chief of the office since NASA astronaut Reid Wiseman left the post late last year.

"Joe is an experienced space flyer and a proven leader, and he will undoubtedly inspire the next generation of NASA astronauts," says NASA Administrator Bill Nelson in a news release. " As we build on the International Space Station’s unparalleled success in low-Earth orbit with our eyes on the Moon and then Mars, Joe will play an integral role in ensuring our NASA astronauts are prepared for the challenges ahead."

Acaba, who spent a total of 306 days in space, has already supported the astronaut office in a few of roles, including director of operations in Russia and chief of the Vehicle Integration Test Office. In this new role, he will be oversee astronaut resources and operations and help develop astronaut flight crew operation concepts. Additionally, Acaba will make crew assignments for future spaceflight missions, including astronauts assigned to fly on Artemis missions.

“Our Johnson Space Center team congratulates Joe Acaba on his selection to chief of the Astronaut Office. We wish him well as he takes on this new and exciting leadership role,” says NASA Johnson Space Center Director Vanessa Wyche.

Samantha Lewis, partner at Mercury Fund

Samantha Lewis was promoted to partner at Mercury Fund. Photo courtesy of Mercury Fund

Samantha Lewis was promoted to partner from principal at Houston-based venture capital firm Mercury, per her LinkedIn. She previously was the investment director of investor network GOOSE Capital before joining the Mercury team just over two years ago.

Last year, Lewis — who also served on the board of two Houston-founded startups, Syzygy and Topl — was named a member of the Class 27 of the Kauffman Fellows Program, a group of global innovation investors.

Lewis is focused on what she calls the "power theme" at Mercury, which includes fintech, blockchain, web3, and more. She told InnovationMap on a recent episode of the Houston Innovators Podcast that these industries have been hit in particular within market uncertainty.

Bob Kleinhample, senior vice president of growth at HTX Labs

Bob Kleinhample joins HTX Labs at a time of strategic growth. Photo courtesy of HTX Labs

Virtual reality studio HTX Labs has named Bob Kleinhample as the company’s senior vice president of growth. He has more than 15 years leading business efforts in the tech space. A 20-year Army veteran, Kleinhample will oversee all aspects of HTX Labs' growth — including business development, product strategy, and marketing.

“Bob brings the right balance of market knowledge and product strategy, in combination with the commitment to bring immersive training and simulation to the warfighter, to really drive our EMPACT offering into the market,” says Scott Schneider, CEO and co-founder of HTX Labs. "We’re very excited to be adding this incredibly important role to our organization and having Bob lead these efforts as we expand the usage and adoption of EMPACT across the Department of Defense."

The appointment comes after the startup raised $3.2 million in its first outside capital round.

“Last year we secured funding from Cypress Growth Capital for the sole purpose of accelerating the growth of our EMPACT platform and our customer base, and we immediately began a search for the right person to lead these growth efforts," Schneider continues. "After performing an extensive search, we are fortunate to have connected with Bob Kleinhample who is coming on board to lead our company’s growth efforts“.

Here are the 10 Houston startups that closed venture capital investment in the fourth quarter of last year. Photo via Getty Images

10 Houston startups start 2023 with fresh venture capital funding

money moves

Houston startups saw a busy last quarter when it came to funding in 2022. From seed to series C, 10 Houston startups wrapped up the year with investment round closings.

In case you missed some of these headlines, InnovationMap has rounded up these 10 deals based on previous reporting. Scroll through to see which Houston startups are catching the eyes — and cashing the checks — of investors.

Houston-based virtual reality startup raises $3.2M in first outside capital round

VR training startup, HTX Labs, has raised funding from an outside investor for the first time. Courtesy of HTX Labs

HTX Labs, a Houston-based company that designs extended reality training for military and business purposes, announced last week that it has raised its first outside capital.

The company has received a $3.2 million investment from Cypress Growth Capital. Founded in 2017, HTX Labs — developer of the EMPACT Immersive Learning Platform — has been granted funding from the Department of Defense as well as grown its client base of commercial Enterprises. The platform uses virtual and extended reality that "enables organizations to rapidly create, deploy, measure, and sustain cost-effective, secure, and centralized immersive training programs, all within engaging, fully interactive virtual environments," per a news release.

“We have been looking to secure outside capital to accelerate the growth of our EMPACT platform and customer base but we hadn’t found the right partner who provided an investment vehicle that matched our needs,“ says HTX Labs CEO Scott Schneider in the release. “We found everything we were looking for in Cypress Growth Capital. They have a non-dilutive funding model that aligns with our capital expectations and have the level of experience that really makes this smart money." Read more.

Houston-based travel tech startup raises nearly $1M to continue expansion

A Houston company has raised additional funding as it grows its encrypted lodging booking platform. Photo via Gustavo Fring/Pexels

A travel booking technology company that's looking to alleviate some of the stresses of finding and making hotel reservations has raised additional seed funding.

Houston-based Pinktada has raised additional funding to the tune of $975,000. Ireland-based Selenean Capital contributed to the seed funding round, joining the company's previous investor True Global Ventures 4 Plus, which has invested $2 million to date. According to Crunchbase data, the latest investment brings the company's total to $3.9 million.

“Selenean Capital’s approach to partnership is identifying real world future needs and then working relentlessly to achieve those goals," says Davin Browne, Selenean’s CEO, in a news release. "Pinktada encapsulates this perfectly with a transformational approach to the hotel booking model built around a brilliant team. We look forward to the partnership and journey with them." Read more.

Houston microgrid tech company announces $150 investment

Houston-based VoltaGrid provides small-scale, self-contained microgrids that can operate independently of major power grids or in tandem with other microgrids. Photo via voltagrid.com

VoltaGrid, a Bellaire-based startup that specializes in distributed power generation via microgrids, has hauled in $150 million in equity funding.

Founded in 2020, VoltaGrid provides small-scale, self-contained microgrids that can operate independently of major power grids or in tandem with other microgrids. VoltaGrid’s product consists of natural gas engines, portable energy storage, natural gas processing and grid power connectivity.

Investors in the $150 million round include the Canada Pension Plan Investment Board (CPP Investments), Longbow Capital, Walter Ventures, and Pilot Company (operator of more than 800 retail and fueling locations in the U.S. and Canada). The $150 million round comes less than a year after VoltaGrid announced a $100 million round featuring the same investors. Read more.

Houston SaaS company raises $15M series B, announces latest release

Houston-based GoCo.io has raised fresh funding and launched the latest version of its platform. Courtesy of GoCo

A Houston startup that is optimizing human resource operations for small businesses has raised fresh funding from an Austin-based venture capital investor.

GoCo.io raised $15 million in September in a funding round led by ATX Venture Partners. Founded in 2015, the company has raised $27.5 million to date, including its $7 million series A in 2019.

The fresh funding will be used to continue expanding on the company's software services operations and upgrades to its product, which is is modernizing HR, benefits, and payroll.

“We believe that GoCo is the company best positioned to provide HR departments at SMBs with the most flexible employee management software,” says Chris Shonk, general partner at ATX Venture Partners, in a news release. “In a crowded marketplace, GoCo clearly rises to the top with its ease-of-use, flexibility and unparalleled customization. Read more.

Houston tech startup raises $3.5M following industry expansion

Rivalry Tech's co-founders — Marshall Law and Aaron Knape — share news of the company's latest round of investment. Photo courtesy of Rivalry Tech

A Houston-based company that optimizes mobile ordering for large venues has closed its latest round of funding.

Rivalry Tech, originally founded as sEATz and tackling mobile ordering in sports venues, has raised $3.5 million following expanding with a new product, myEATz, that targets the health care, leisure, and business industries. The round was led by Houston-based Sightcast, with participation from Houston-based Softeq Venture Studio, Rice University’s Valhalla Investment Group, and more.

“Sightcast Capital Partners looks to invest in strong, founder-led companies that bring a forward-thinking solution to everyday problems," says Neal Simpson, managing partner of Sightcast Capital Partners, in a news release. "In Rivalry Tech, we saw a team that recognized an opportunity to streamline the way in which food and beverage transactions occur in the healthcare, leisure, sports, and entertainment markets. Their two-sided approach of using technology as a tool to increase vendor profitability and also positively influence consumer experience is what immediately attracted us to this opportunity." Read more.

Houston unicorn chemicals company raises $200M series D

Solugen closed its series D funding round at $200 million. Photo via Getty Images

Houston-based Solugen has announced its latest round of investment to the tune of $200 million. The company, which reached unicorn status after its $357 million series C round last year, uses its patented Bioforge processes to produce "green" chemicals from bio-based feedstocks.

"Solugen is reimagining the chemistry of everyday life with enzymes found in nature. We make chemicals better, faster, cheaper, and without fossil fuels from right here in Houston, Texas. Whether you care about the climate, local competitiveness, or just plain old profits, we have good news: it's working," the company states in its news release. Read more.

Houston company closes $76M series C round to fuel its mission of reducing carbon emissions

Syzygy Plasmonics has raised a series C round of funding. Photo courtesy of Syzygy

A Houston-based company that is electrifying chemical manufacturing has closed its largest round of funding to date.

Syzygy Plasmonics closed a $76 million series C financing round led by New York-based Carbon Direct Capital. The round included participation from Aramco Ventures, Chevron Technology Ventures, LOTTE CHEMICAL, and Toyota Ventures. The company's existing investors joining the round included EVOK Innovations, The Engine, Equinor Ventures, Goose Capital, Horizons Ventures, Pan American Energy, and Sumitomo Corporation of Americas. According to a news release, Carbon Direct Capital will join Syzygy's board and serve as the series C director.

"We were very attracted to the multiple use cases for the Syzygy reactor and the lifetime-value of each Syzygy customer," says Jonathan Goldberg, Carbon Direct Capital's CEO, in the release. "Emissions from hydrogen production total more than 900 million metric tons of carbon dioxide per year. Syzygy's photocatalysis technology is a key solution to decarbonize hydrogen production as well as other critical industries." Read more.

Houston SaaS startup raises $6M seed

Houston-based SynMax has closed its first round of funding. Photo via Getty Images

A Houston-based satellite data analytics company is celebrating an oversubscribed round of recent funding.

SynMax announced this week that it closed its seed round at $6 million with an oversubscription of $2 million. The startup is providing geospatial intelligence software as a service to customers within the energy and maritime industries. The technology combines earth observation imagery and key data sources for predictive analytics and artificial intelligence.

The company reports that all of the investment came from SynMax customers. The round was led by Houston-based Skylar Capital, an investment management firm focused on the natural gas market. Read more.

Houston health tech startup secures $27M in financing

A Houston startup that created a remote monitoring and care platform has raised millions in financing. Image via michealthcare.com

A virtual health care and analytics provider startup has closed its latest round of funding for a total of $27 million in financing.

Medical Informatics Corp. closed a $17 million series B co-led by Maryland-based Catalio Capital Management and California-based Intel Capital. The financing also includes an additional $10 million in debt led by Catalio through Catalio’s structured equity strategy, according to a news release.

“We are excited to have had this round co-led by Catalio and Intel Capital," says Emma Fauss, CEO and co-founder of MIC, in the release. "Catalio brings significant financial and technical resources, while Intel Capital possesses strong operational and industry experience, and we look forward to continuing to leverage both firms’ expertise as we continue to scale.” Read more.

Houston sportstech platform raises $1.3M seed round

This Houston startup has fresh funding to build out its data intelligence platform. Photo via aim7.com

How many times have you forced yourself to do an arduous workout when you just weren’t feeling it? Despite what some trainers will tell you, you probably didn’t feel any better after. Sports scientist Dr. Erik Korem could have told you that, but more importantly, so could his creation, AIM7.

Marketed as “the fastest, easiest way to change your habits and improve your health,” Korem just raised a $1.3 million seed round that will bring his ambitious app to consumers in its beta form early next month.

The data intelligence platform would know that on a day that you’re stressed, that Peloton tabata ride might not be in your best interest. How? “The data from your Apple Watch or your Fitbit is just data. ‘I walked 7000 steps or I slept 8 hours,’” explains Korem. “We are the recommendation engine that makes this usable for you.” Read more.

This week's roundup of Houston innovators includes Sarah Essama of Teach for America Houston, Scott Schneider of HTX Labs, and Drs. Maria Elena Bottazzi and Peter Hotez. Photos courtesy

4 Houston innovators to know this week

who's who

Editor's note: In this week's roundup of Houston innovators to know, I'm introducing you to four local innovators across industries — from health tech to software — recently making headlines in Houston innovation.

Sarah Essama, director of social innovation at Teach For America Houston

Sarah Essama of Teach For America Houston shares how she innovated a new way for students themselves to learn how to innovate. Photo courtesy of Sarah Essama

As director of social innovation at Teach For America Houston, it's Sarah Essama's job to come up with new ways for the organization to support both students and teachers. But, as she explains on the Houston Innovators Podcast this week, Essama realized a huge lesson modern students needed was to learn this innovation process themselves.

This line of thinking turned into Essama founding The Dream Lab, powered by Teach for America Houston.

"The Dream Lab is a set of immersive design spaces where young people leverage their imagination and creativity to innovate and solve problems within their community," she explains.

Last month, the new concept rolled out to high school students in partnership with DivInc Houston, a nonprofit focused on social and economic equity in entrepreneurship, and 21 ninth graders spent the day at the Ion for a mini-innovation accelerator and design showcase. Click here to read more.

Scott Schneider, CEO and founder of HTX Labs

Scott Schneider of HTX Labs has something to celebrate. Photo via htxlabs.com

A Houston-based virtual reality training provider has closed its first round of funding. HTX Labs announced last month that it has received a $3.2 million investment from Cypress Growth Capital.

The fresh funding will go toward growing and scaling the company's operations — both within the current Department of Defense and expansion opportunities into key commercial markets, like heavy industry, manufacturing, and higher education. Additionally, the funding will support increased customer adoption. Click here to read more.

Drs. Maria Elena Bottazzi and Peter Hotez

Two Houston health care innovators got the green light to distribute their low-cost COVID-19 vaccine in Indonesia. Photo courtesy of TMC

After months of development and testing, the Houston-born COVID-19 vaccine has gotten the go-ahead to be produced and distributed in Indonesia.

IndoVac was created by the Texas Children’s Hospital Center for Vaccine Development and Baylor College of Medicine. Drs. Peter Hotez and Maria Elena Bottazzi lead the vaccine project. Bio Farma is licensing IndoVac from BCM Ventures, the commercial group at the Baylor College of Medicine.

“Access to vaccines in the developing world is critical to the eradication of this virus,” Hotez, co-director of the Texas Children’s Hospital Center for Vaccine Development and dean of the National School of Tropical Medicine at Baylor College of Medicine, says in a news release. Click here to read more.

VR training startup, HTX Labs, has raised funding from an outside investor for the first time. Courtesy of HTX Labs

Houston-based virtual reality startup raises $3.2M in first outside capital round

fresh funding

HTX Labs, a Houston-based company that designs extended reality training for military and business purposes, announced last week that it has raised its first outside capital.

"Cypress has a decade-long track record of success in helping emerging software and services companies achieve scale," he continues. "It is clear that the team’s collective entrepreneurial and operating experience will be of tremendous benefit to us as we focus on expanding our customer base in a very intentional way.”

“Scott and his team have built an exceptional business that is poised for dramatic growth,” says Cypress Partner Pat McCaffrey in the release. “HTX Labs’ modern, immersive training solution provides clients with a force multiplier for modernizing training and an unmatched ROI.”

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Intuitive Machines forms partnership with Italian companies for lunar exploration services

to the moon

Houston-based space technology, infrastructure and services company Intuitive Machines has forged a partnership with two Italian companies to offer infrastructure, communication and navigation services for exploration of the moon.

Intuitive Machines’ agreement with the two companies, Leonardo and Telespazio, paves the way for collaboration on satellite services for NASA, a customer of Intuitive Machines, and the European Space Agency, a customer of Leonardo and Telespazio. Leonardo, an aerospace, defense and security company, is the majority owner of Telespazio, a provider of satellite technology and services.

“Resilient, secure, and scalable space infrastructure and space data networks are vital to customers who want to push farther on the lunar surface and beyond to Mars,” Steve Altemus, co-founder and CEO of Intuitive Machine, said in a news release.

Massimo Claudio Comparini, managing director of Leonardo’s space division, added that the partnership with Intuitive Machines is a big step toward enabling human and robotic missions from the U.S., Europe and other places “to access a robust communications network and high-precision navigation services while operating in the lunar environment.”

Intuitive Machines recently expanded its Houston Spaceport facilities to ramp up in-house production of satellites. The company’s first satellite will launch with its upcoming IM‑3 lunar mission.

Intuitive Machines says it ultimately wants to establish a “center of space excellence” at Houston Spaceport to support missions to the moon, Mars and the region between Earth and the moon.

Houston hospitals win $50M grant for ibogaine addiction treatment research

ibogaine funding

The Texas Health and Human Services Commission has awarded $50 million to UTHealth Houston in collaboration with The University of Texas Medical Branch at Galveston (UTMB Health) to co-lead a multicenter research trial to evaluate the effect of ibogaine, a powerful psychoactive compound, on patients suffering from addiction, traumatic brain injury and other behavioral health conditions.

The funding will establish a two-year initiative—known as Ibogaine Medicine for PTSD, Addiction, and Cognitive Trauma (IMPACT)—and a consortium of Texas health institutions focused on clinical trials and working toward potential FDA-approved treatments.

The consoritum will also include Texas Tech University, Texas Tech University Health Sciences Center El Paso, The University of Texas at Austin, The University of Texas Health Science Center at San Antonio, The University of Texas at Tyler, The University of Texas Rio Grande Valley, Texas A&M University, The University of North Texas Health Science Center, Baylor College of Medicine and JPS Health Network in Dallas.

Ibogaine is a plant-based, psychoactive substance derived from the iboga shrub. Research suggests that the substance could be used for potential treatment for patients with traumatic brain injuries, which is a leading cause of post-traumatic stress disorders. Ibogaine has also shown potential as a treatment for addiction and other neurological conditions.

UTHealth and partners will focus on ways that ibogaine can treat addiction and associated conditions. Meanwhile, UT Austin and Baylor College of Medicine will concentrate on using it to treat traumatic brain injury, especially in veterans, according to a news release from the institutions.

The consortium will also support drug developers and teaching hospitals to conduct FDA-approved clinical trials. The Texas Health and Human Services Commission will oversee the grant program.

“This landmark clinical trial reflects our unwavering commitment to advancing research that improves lives and delivers the highest standards of care,” Dr. Melina Kibbe, UTHealth Houston president and the Alkek-Williams Distinguished Chair, said in the news release. “By joining forces with outstanding partners across our state, we are building on Texas’ tradition of innovation to ensure patients struggling with addiction and behavioral health conditions have access to the best possible outcomes. Together, we are shaping discoveries that will serve Texans and set a model for the nation.”

The consortium was authorized by the passage of Senate Bill 2308. The bill provides $50 million in state-matching funds for an ibogaine clinical trial managed by a public university in partnership with a drug company and a hospital.

“This is the first major step towards the legislature’s goal of obtaining FDA approval through clinical trials of ibogaine — a potential breakthrough medication that has brought thousands of America’s war-fighters back from the darkest parts of depression, anxiety, PTSD, and chronic addiction,” Texas Rep. Cody Harris added in the release. “I am excited to walk alongside UTHealth Houston and UTMB as these stellar institutions lead the nation in a first-of-its-kind clinical trial in the U.S.”

Recently, the University of Houston also received a $2.6 million gift from the estate of Dr. William A. Gibson to support and expand its opioid addiction research, which includes the development of a fentanyl vaccine that could block the drug's ability to enter the brain. Read more here.

Tesla no longer world's biggest EV maker as sales fall for second year

Tesla Talk

Tesla lost its crown as the world’s bestselling electric vehicle maker as a customer revolt over Elon Musk’s right-wing politics, expiring U.S. tax breaks for buyers and stiff overseas competition pushed sales down for a second year in a row.

Tesla said that it delivered 1.64 million vehicles in 2025, down 9% from a year earlier.

Chinese rival BYD, which sold 2.26 million vehicles last year, is now the biggest EV maker.

It's a stunning reversal for a car company whose rise once seemed unstoppable as it overtook traditional automakers with far more resources and helped make Musk the world's richest man. The sales drop came despite President Donald Trump's marketing effort early last year when he called a press conference to praise Musk as a “patriot” in front of Teslas lined up on the White House driveway, then announced he would be buying one, bucking presidential precedent to not endorse private company products.

For the fourth quarter, Tesla sales totaled 418,227, falling short of even the much reduced 440,000 target that analysts recently polled by FactSet had expected. Sales were hit hard by the expiration of a $7,500 tax credit for electric vehicle purchases that was phased out by the Trump administration at the end of September.

Tesla stock fell 2.6% to $438.07 on Friday.

Even with multiple issues buffeting the company, investors are betting that Tesla CEO Musk can deliver on his ambitions to make Tesla a leader in robotaxi services and get consumers to embrace humanoid robots that can perform basic tasks in homes and offices. Reflecting that optimism, the stock finished 2025 with a gain of approximately 11%.

The latest quarter was the first with sales of stripped-down versions of the Model Y and Model 3 that Musk unveiled in early October as part of an effort to revive sales. The new Model Y costs just under $40,000 while customers can buy the cheaper Model 3 for under $37,000. Those versions are expected to help Tesla compete with Chinese models in Europe and Asia.

For fourth-quarter earnings coming out in late January, analysts are expecting the company to post a 3% drop in sales and a nearly 40% drop in earnings per share, according to FactSet. Analysts expect the downward trend in sales and profits to eventually reverse itself as 2026 rolls along.

Musk said earlier last year that a “major rebound” in sales was underway, but investors were unruffled when that didn't pan out, choosing instead to focus on Musk's pivot to different parts of business. He has has been saying the future of the company lies with its driverless robotaxis service, its energy storage business and building robots for the home and factory — and much less with car sales.

Tesla started rolling out its robotaxi service in Austin in June, first with safety monitors in the cars to take over in case of trouble, then testing without them. The company hopes to roll out the service in several cities this year.

To do that successfully, it needs to take on rival Waymo, which has been operating autonomous taxis for years and has far more customers. It also will also have to contend with regulatory challenges. The company is under several federal safety investigations and other probes. In California, Tesla is at risk of temporarily losing its license to sell cars in the state after a judge there ruled it had misled customers about their safety.

“Regulatory is going to be a big issue,” said Wedbush Securities analyst Dan Ives, a well-known bull on the stock. “We're dealing with people's lives.”

Still, Ives said he expects Tesla's autonomous offerings will soon overcome any setbacks.

Musk has said he hopes software updates to his cars will enable hundreds of thousands of Tesla vehicles to operate autonomously with zero human intervention by the end of this year. The company is also planning to begin production of its AI-powered Cybercab with no steering wheel or pedals in 2026.

To keep Musk focused on the company, Tesla’s directors awarded Musk a potentially enormous new pay package that shareholders backed at the annual meeting in November.

Musk scored another huge windfall two weeks ago when the Delaware Supreme Court reversed a decision that deprived him of a $55 billion pay package that Tesla doled out in 2018.

Musk could become the world's first trillionaire later this year when he sells shares of his rocket company SpaceX to the public for the first time in what analysts expect would be a blockbuster initial public offering.

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