Tesla Bets On Bot Smoke Screen As Political And Market Realities Bite

Speaking to Tesla investors last night, CEO Elon Musk was optimistic about the future of his automotive manufacturer.

"There will probably be prototypes of Optimus three by the end of this year, and then scale production next year. We will scale Optimus production as fast as possible and try to get to a million units a year as quickly as possible. We think we can get there in less than five years," he said.

Quick-witted observers will be first to point out that Optimus is not a car model set to be launched into a tried-and-tested market. It is an idea for a humanoid robot, which is yet to be built and launched, into a market which is completely unproven, at a price and cost that is yet to be revealed.

As business strategies go, it may have some weaknesses. Nonetheless, given the state of Tesla's actual automotive operation, it might be wise to draw attention to Musk's bot fantasy – first mooted in 2021 by a man capering about in a spandex suit – rather than facts facing Tesla's automotive cornerstone.

Musk was chatting to investors, of course, because Tesla reported its calendar Q2 earnings, last night. And in an outlook tinged with pessimism, it noted net profits [PDF] had slid 23 percent. Loss of EV and solar power incentives in US president Trump's so-called "Big Beautiful Bill" also create a threat to Tesla's bottom line, as does the introduction of steep trade tariffs in the US, another fundament of Trump policy.

"We are in the transition period where we will lose a lot of incentives in the US," Musk said. "We probably could have a few rough quarters," he added.

Tesla shares fell almost 7 percent after the news, down 30 percent from last December's peak of $480 per share.

Second quarter delivery numbers were also down, falling to 384,122 vehicles, a drop of 14 percent from Q2 2024 and the second consecutive year-over-year drop.

Critics might point out that Musk backed the wrong horse, politically speaking, when he endorsed Donald Trump's presidential candidacy with a package worth around $277 million. Others may reference the damage his over-enthusiastic adoption of fringe online content has done to his reputation, particularly in Europe, where sales have dropped by one-third this year to 110,000, according to figures from the European Automobile Manufacturers Association (ACEA).

Musk may be right to point out that Tesla is at a crossroads, but not in the way he thinks. As the man said to have made electric vehicles sexy, he may soon run out of road. In the luxury market, the brand faces competition from European marques, which retain their cachet. In the mass market, it faces competition from the Far East, particularly China's BYD.

• Struggling to sell EVs, Tesla pivots to slinging burgers
• Uber to roll out thousands of robo-cabs built by China's Baidu
• Musk's antics and distractions are backfiring as Tesla's car business stalls
• Tesla Robotaxi videos show Elon's way behind Waymo
• Musk and Trump take slap fight public as bromance ends

Last year, Tesla told suppliers it aimed to launch a new mass market electric vehicle in 2025 while rumors of the affordable Model Q have persisted into this year.

Instead, Musk pushed the idea that its future success will come from a self-driving robotaxi service, which launched in Austin last month, and underwhelmed observers.

Tesla was once the car of the future. Such are its current challenges; it's fair to ask, will anyone miss it? After all, the DeLorean once held that mantle, and now it is only remembered in a fantasy film, sadly long in the past. ®