Elon Musk focuses on robotics as Tesla earnings slumped 46% final 12 months : NPR

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David Zalubowski/AP Tesla's revenue dropped 46% 12 months over 12 months, the corporate revealed in its earnings replace Wednesday night.

That was not precisely a shock — in truth, it was higher than most analysts had anticipated. Tesla had already reported gross sales for the quarter, which confirmed the continuation of a stoop that stretched by way of a lot of the 12 months. Extra income from different elements of the corporate, like a rising vitality storage enterprise, have not made up for the truth that Tesla's not promoting as many automobiles because it used to.

Tesla, as soon as the undisputed international chief in electrical car gross sales, has misplaced that crown as its model status has soured and competitors — notably from China — has grown extra intense.

However the firm continues to keep up that it is within the means of transitioning from being a automobile firm to a "bodily AI firm," with worth based mostly on its self-driving car expertise, its robotaxi service and, finally, humanoid robots.

As a part of that pivot, Tesla is discontinuing its higher-end Mannequin S and Mannequin X automobiles. The automobiles have been already made in a lot smaller numbers than the extra inexpensive Fashions 3 and Y, however had symbolic worth. The Mannequin S, particularly, was a significant step ahead for Tesla and electrical automobiles; Tesla known as it the "world's first mass-produced, highway-capable EV," and it was the primary car constructed at Tesla's Fremont manufacturing unit.

As an alternative of extra conventional automobiles, the corporate is focusing its consideration on its "Cybercab," a car constructed with no steering wheel or pedals that is meant to interchange current Teslas within the firm's nascent robotaxi enterprise.

"We'd anticipate over time to make way more Cybercabs than all of our different automobiles mixed," Musk stated on a quarterly earnings name with traders and analysts Wednesday evening. "The overwhelming majority of miles traveled might be autonomous sooner or later … I am simply guessing, however in all probability lower than 5% of miles pushed might be the place someone is definitely driving the automobile themselves."

And as for robots, Tesla is taking the Mannequin S and Mannequin X manufacturing traces within the Fremont plant and dedicating that house to manufacturing of the "Optimus" humanoid robotic, which Musk stated would launch manufacturing this 12 months. (Musk has a historical past, which he typically jokingly refers to, of overpromising on timelines.)

Musk warned Wall Avenue that as a part of these plans, the corporate can be shelling out quite a lot of money within the 12 months forward — an eye-popping $20 billion, greater than double what the corporate spent on capital expenditures in 2025.

"We're making large investments for an epic future," Musk stated.

Tesla misplaced its spot as world's prime EV vendor A Chinese language firm, not Tesla, is now the world's prime EV maker.

In 2025, the Chinese language automaker BYD offered greater than 2.25 million battery-powered automobiles, in line with the corporate.

Tesla offered 1.65 million, fewer than it offered in 2024. It is the second straight 12 months of gross sales declines.

In late 2023, Musk had warned traders that Tesla was in between "development waves," setting expectations low for 2024 however promising a return to speedy growth with the launch of a "next-generation" car that was tentatively deliberate for 2025.

That second development wave hasn't materialized. Tesla repeatedly teased a less expensive Tesla, rumored to promote for about $25,000 because of revolutionary modifications in manufacturing. Even after Reuters reported that the car was useless, Musk publicly maintained it was coming.

However it wasn't. Musk finally confirmed that the corporate would focus its main redesign efforts on the Cybercab. As an alternative of providing a considerably cheaper car, the corporate rolled out barely cheaper variations of the Mannequin 3 and Mannequin Y.

In the meantime, the electrical car market within the U.S. has taken a considerable hit. Gross sales have been already underperforming expectations, after which President Trump took workplace and his administration started to systematically roll again EV incentives and rules. Gross sales of EVs rose sharply in the summertime of 2025 as customers tried to make the most of a disappearing shopper tax credit score, after which dropped when the tax credit score expired on the finish of September. Automakers say it is nonetheless not clear what demand for EVs will appear to be with out these tax credit.

Trump's coverage modifications have affected Tesla much more instantly, by taking away a key income stream. Beneath earlier authorities insurance policies, automakers who did not meet necessities for making their automobiles cleaner might purchase "credit" from opponents who overperformed on constructing EVs, in lieu of paying fines. This was a profitable supply of money for Tesla, and one that's now dwindling away. Tesla sometimes doesn't reply to requests for remark, and didn't reply to an inquiry for this story.

Globally, in the meantime, EVs are nonetheless ascendant. In December, within the European Union, consumers registered extra new pure EVs than conventional gasoline automobiles for the primary time ever. Hybrids (like the unique Prius) stay extra common than both, however that market is not rising as quick as EVs. In Europe, EV gross sales elevated by greater than 50% year-over-year, whereas these common hybrids rose solely 6%. Conventional gasoline- and diesel-powered automobile gross sales dropped by round 20%.

In China, most new automobiles are already electrical or plug-in hybrids. And Chinese language exports of EVs are rising, taking off in locations like Mexico and Brazil. Canada, too, simply struck a deal to permit the import of some Chinese language-made EVs with out hefty tariffs.

Along with BYD's conspicuous success, the most important Chinese language automaker Geely has boosted its battery-powered car gross sales by 90% 12 months over 12 months, whereas competitor SAIC grew gross sales by 33%.

These figures embody the gross sales of plug-in hybrids, making them much less of an apples-to-apples comparability to Tesla's pure electrical gross sales — however in comparison with Tesla's gross sales decline, the trajectory is evident. Tesla as soon as had the lead within the EV race, however the momentum is now with Chinese language producers.

Model takes a beating In the meantime, Tesla has been grappling with an more and more skeptical — and even hostile — shopper base within the U.S.

Musk's controversial political actions over the previous couple of years have alienated many left-of-center Individuals. Whereas he received some followers on the precise, thus far, Republicans and conservatives stay much less possible to purchase EVs.

Evan Roth Smith is a pollster who has been monitoring shopper sentiment about Tesla and EVs for the Electrical Car Intelligence Report. In response to his most up-to-date survey of greater than 3,000 U.S. customers, almost all automobile manufacturers have an general constructive status. Toyota ranks on the prime: Almost half of Individuals have a constructive view of the Japanese model, and solely 7% have a adverse view. For Tesla, in distinction, 27% have a constructive view and 37% a adverse view — the corporate has extra haters than followers.

Tesla's diploma of unpopularity among the many normal public may be very uncommon for an automaker, he says: "Most carmakers haven't any form of political valence or mass controversy connected to them."

And model perceptions have an effect on gross sales.

Even present Tesla homeowners, who've lengthy been remarkably loyal to the model, are exhibiting slightly extra curiosity in purchasing round. LexisNexis Danger Options tracks what manufacturers present automobile homeowners buy for his or her subsequent car; in the event that they keep on with the identical model, that is proof of name loyalty. Of their information, Tesla — which has ranked first or second for trade loyalty lately, has slipped to 3rd place in 2025.

The corporate nonetheless enjoys increased loyalty than the trade common. However it's clear that EV consumers have extra choices now, and even Tesla fanatics are extra keen to contemplate them. In 2020, LexisNexis discovered that amongst current Tesla homeowners who bought one other EV, a outstanding 98% received one other Tesla. In 2025, that quantity dropped to 78%.

Musk's focus is on AI and robots, not automobiles Musk — who was lately granted a rare pay package deal value as much as a trillion {dollars}, contingent on assembly lofty targets for Tesla's development and valuation — has maintained for years that Tesla's future lies in autonomous automobiles, synthetic intelligence and humanoid robots.

However he has steadily missed his personal timelines for these achievements; the driver-assistance software program in Tesla automobiles nonetheless requires human oversight, and the robotaxi service is just out there in small pilot packages in Texas and California, regardless of Musk promising service to 50% of America by the tip of 2025.

Roth Smith's polling has discovered that this continued deal with autonomy and robotaxis just isn't serving to Tesla win over public opinion. The "Full Self-Driving (Supervised)" software program that enables Tesla automobiles to steer themselves — with human oversight — is central to Musk's imaginative and prescient for the corporate. Roth Smith's survey discovered that solely 14% of respondents stated FSD made them extra possible to purchase a Tesla; 34% stated it made them much less possible.

And out of greater than 20 completely different auto manufacturers that Roth Smith polled customers about, the one ones apart from Tesla to have a web adverse view from the general public have been Cruise, Waymo and Zoox — all autonomous car firms.

"There's quite a lot of skepticism from customers over whether or not this expertise is secure for mass deployment but, whether or not regulators are as much as the duty of making guidelines of the highway for autonomous automobiles," Roth Smith says.

By focusing a lot on autonomy, Roth Smith argues, Musk has related Teslas with these controversial robotaxis. "They now are perceived like a way more controversial, far more polarizing kind of expertise," he says.