Tesla sales slump deepens as Musk bets big on robotaxis and AI

Tesla sales slump deepens as Musk bets big on robotaxis and AI

Tesla is grappling with one of its worst sales downturns in years, even as CEO Elon Musk shrugs off the slump and urges investors to stay focused on a futuristic vision of robotaxis and humanoid robots. The electric vehicle maker reported a 13.5% drop in global deliveries for the second quarter—its second straight quarterly decline—as EV demand cools and competition intensifies, the Wall Street Journal reported.

Car sales sink, profit plunges

Tesla’s core auto business—responsible for three-quarters of its $100 billion in revenue—has been sputtering in 2025. First-quarter profits plunged 71%, kept afloat only by $595 million in regulatory credit sales. Analysts expect another tough earnings report on July 23, forecasting a nearly 10% revenue dip and a 20% drop in profit.

Once hailed as the leader in electric vehicles, Tesla now trails in innovation as rivals like General Motors and China’s BYD roll out cutting-edge models. Meanwhile, U.S. consumer interest in EVs has cooled. EV sales across the market fell 7% in Q2, according to Cox Automotive, with companies like Ford and Hyundai also seeing steep drops.

Musk: Forget the road, look to the hill

In response, Musk has doubled down on a new narrative: Tesla’s future lies not in cars but in AI-driven autonomy. “Lift your gaze to the bright shining citadel on the hill,” he told investors, touting visions of a world filled with self-driving Cybercabs and Optimus humanoid robots. Despite shelving the affordable $25,000 Model 2, Musk says the future doesn’t include steering wheels or pedals.

In June, Tesla launched its first robotaxi service in Austin, Texas. Musk claims the service—still limited in scope—could eventually add up to $10 trillion in market value. Last week, Tesla showcased a Model Y that autonomously drove itself from the Austin factory to a customer’s home.

Behind the dream, deeper problems

Tesla’s pivot comes as its traditional car business faces mounting headwinds. The flashy but slow-selling Cybertruck is the only new model Tesla has introduced in five years. Price cuts meant to boost sales have pressured margins, and the Biden-era EV tax credits may soon be pulled by Congress, raising prices for consumers. Supply chains remain vulnerable to trade tensions, especially with China, a key source of rare-earth materials.

The company has also been hit by executive turnover. Elon Musk’s longtime aide Omead Afshar and Optimus program head Milan Kovac both exited in recent weeks. And amid investor unease, Tesla’s board has faced pressure to rein in Musk and get him to refocus on the struggling car business.

Politics, PR, and a $1 trillion question

Musk’s political entanglements haven’t helped. His $300 million support for Trump’s reelection bid and recent online feuds with the president have drawn backlash from both sides of the political aisle. Trump even joked about “putting DOGE on Elon” and floated the idea of deporting the naturalized U.S. citizen after a spat over Republican fiscal policy.

Still, investors continue to bet on Musk’s long-term vision. Tesla’s market value hovers around $1 trillion, despite analysts valuing the core car business at just $50 to $100 per share—far below its current $300 trading price.

A risky ride into the future

Tesla’s latest impact report reads like a sci-fi manifesto: autonomous cars in solar cities, humanoid robots babysitting and grocery-carrying. “We believe autonomy will save lives, time and money,” the report proclaims.

But for now, the dream remains aspirational. Tesla’s core business is hurting, and Musk’s AI revolution is still on the drawing board. Whether investors keep buying the vision as the numbers worsen may decide if Tesla remains an industry disruptor—or just another tech gamble with too much hype and too little traction.