{"id":399234,"date":"2026-01-30T18:46:09","date_gmt":"2026-01-30T18:46:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/399234\/"},"modified":"2026-01-30T18:46:09","modified_gmt":"2026-01-30T18:46:09","slug":"tesla-throws-in-the-towel-on-car-sales","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/399234\/","title":{"rendered":"Tesla throws in the towel on car sales"},"content":{"rendered":"

Is Tesla still a car company? It\u2019s a question we\u2019ve been asking ourselves more frequently<\/a> over the past year, especially as the company\u2019s car business shrinks and Elon Musk continues to push the message that Tesla should be seen more as an AI and robotics leader and less so as a mere seller of four-wheeled conveyance.<\/p>\n

Last night during Telsa\u2019s quarterly earnings call<\/a>, the question of whether Tesla still wants to sell cars was seemingly answered by Musk and his lieutenants. In one fell swoop, the company killed off its original flagship EVs<\/a>, the Model S and Model X, to make room for the mass production of a humanoid robot that, as we\u2019ve seen numerous times, struggles with basic tasks. A top Tesla executive said that the company should be viewed more as \u201ctransportation as a service\u201d than as an automaker. And Musk repeated his assertion that Tesla didn\u2019t need to make more mass-market vehicles because, in the future, all cars will be autonomous.<\/p>\n

\u201cThe vast majority of miles traveled will be autonomous in the future,\u201d Musk said. \u201cYou know, I would say probably less than\u2014I\u2019m just guessing\u2014but probably less than 5 percent of miles driven will be where somebody\u2019s actually driving the car themselves in the future, maybe as low as 1 percent.\u201d<\/p>\n

\u201cThe vast majority of miles traveled will be autonomous in the future.\u201d<\/p>\n

And a bit later, Musk doubled down. \u201cSo, you know, I think long-term\u2026 the only vehicles that we\u2019ll make will be autonomous vehicles.\u201d<\/p>\n

To be sure, Tesla still makes and sells cars, but based on Musk\u2019s comments and actions, it feels like Tesla is a car company in name only. In 2025, Tesla brought in $94.8 billion in revenue, $69.5 billion \u2014 or 73 percent \u2014 of which was from car sales. Its automotive revenues have been in free fall, down 10 percent year over year, while its other revenue streams \u2014 energy generation and storage; and services and other revenue \u2014 are on the upswing.<\/p>\n

This year, Tesla lost its title as the global leader in EV sales to BYD. Its two main vehicle programs, the Model 3 and Model Y, are in decline, despite efforts to introduce more affordable versions of both vehicles. Globally, EV tax credits and other incentive programs that helped bring down costs and make these vehicles affordable to more people are going away \u2014 which Musk had a hand in, thanks to his donations and support for Donald Trump. And Musk\u2019s political activities, and his divisive public persona, have turned the Tesla brand toxic for a broad swath of the company\u2019s progressive customer base.<\/p>\n

Like many tech companies before it, Tesla is pinning its hopes on a future driven by subscription revenue. For the first time, the company disclosed the number of active Full Self-Driving (Supervised) subscriptions \u2014 1.1 million \u2014 which Musk claimed was a 38 percent increase over the fourth quarter 2024. Musk recently said that Tesla would stop selling its Full Self-Driving feature as a standalone package and shift to subscription only<\/a>.<\/p>\n

It feels like Tesla is a car company in name only<\/p>\n

FSD allows for hands-free driving on highways and urban areas, but drivers are required to keep their eyes on the road and be ready to take control if something goes wrong. Tesla has faced numerous lawsuits<\/a> and investigations<\/a> over the years related to the safety and marketing of FSD.<\/p>\n

But to Musk, FSD and robotaxis are the future. He predicted that Tesla\u2019s autonomous taxis will be available in \u201cdozens\u201d of US cities this year, after falling short of his previously stated expansion plans<\/a>. And he touted the imminent reveal of a \u201cGen 3\u201d version of Tesla\u2019s Optimus robot<\/a>, which he said would be ready for mass production at the end of 2027.<\/p>\n

Autonomy isn\u2019t just key to Tesla\u2019s future; it\u2019s also key to Musk unlocking a pay package<\/a> worth up to $1 trillion<\/a> for himself. Musk made a bet with shareholders: give me control over a robot army, and I\u2019ll make you all rich. Under the deal, he would need to meet a series of ambitious milestones to receive the compensation, including producing over a million robots, a million robotaxis, and creating $7.5 trillion in value for Tesla\u2019s shareholders.<\/p>\n

But look at the requirements in the agreement, someone who doubts the premise of this article might say. Tesla still needs to sell millions of cars in order for Musk to become the world\u2019s first trillionaire, right? The vehicle sales milestone is actually a pretty easy layup<\/a>. If Tesla sells 1.2 million cars a year over the next decade, on average, Musk earns $8.2 billion in stock \u2014 as long as Tesla\u2019s market value grows from $1.4 trillion today to $2 trillion in 2035. That\u2019s a half-million fewer cars per year than Tesla sold in 2024. The decline in Tesla\u2019s vehicle-selling business appears to be baked into the premise of Musk\u2019s pay package.<\/p>\n

It\u2019s important to note that the death of Tesla\u2019s car business has been enabled every step of the way by Tesla\u2019s board and its shareholders. They completely buy Musk\u2019s vision of a future dominated by AI, self-driving cars, and humanoid robots. This in spite of Tesla\u2019s difficulty in keeping pace with Waymo\u2019s robotaxis and the clear shortcomings of its Optimus robots. Its robotaxis are crashing at a higher rate than human drivers, even with safety drivers in the vehicle, according to federal crash data reported by Electrek<\/a>. And its robots are mostly remote operated<\/a> and struggle with basic tasks<\/a>. Musk himself admitted in the earnings call that Optimus is not currently working in Tesla\u2019s factories \u201cin a material way.\u201d<\/p>\n

But Tesla\u2019s moves to pivot away from the quotidian business of making and selling cars is not happening in isolation. Broadly, the long-term goal for many automakers is to build so-called software-defined vehicles, an industry term that describes connected vehicles that can continuously improve over time through over-the-air software updates. And the companies\u2019 main goal is to get its customers to pay for those upgrades through subscriptions<\/a>. And why not? Making cars is a brutal, labor intensive, low-margin business. Who wouldn\u2019t want some of that sweet, sweet recurring revenue you get from subscription services?<\/p>\n

The death of Tesla\u2019s car business has been enabled every step of the way by Tesla\u2019s board and its shareholders<\/p>\n

But Tesla isn\u2019t going to sell enough FSD subscriptions to make up for main source of its revenue, which is selling cars \u2014 not in the near term, and probably not in the long term either, given the slow pace of autonomy development. And now, with the death of the Model S and Model X, it has two fewer cars in its lineup to rely on.<\/p>\n

Chasing the robot\/robotaxi dream is enormously expensive: Tesla estimates it will spend $20 billion in capital expenditures in 2026, more than double the $8.5 billion it spent last year. Most of the record investment will be spent on production lines \u200dfor the Cybercab, a fully autonomous vehicle without a steering wheel and pedals, the long-promised Tesla semi-truck, Optimus robots, and plants for battery and lithium production, chief financial officer Vaibhav Taneja said.<\/p>\n

Toward the end of the earnings call, Musk admitted that a lot of that spending will be \u201cout of desperation.\u201d<\/p>\n

\u201cLike, why do we have to build these things?\u201d he said, citing lithium and cathode refineries as among the things Tesla needs to build to fuel its transformation. \u201cCan someone else build these things? I mean, it\u2019s very hard to build these things.\u201d<\/p>\n

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