Tesla founder and CEO Elon Musk told investors that his Cybercab self-driving robotaxi would eventually be sold in numbers ‘several times more’ than all of the company’s other models combined.GONZALO FUENTES/Reuters
Gus Carlson is a U.S.-based columnist for The Globe and Mail.
Elon Musk’s pivot away from the electric vehicles that made him rich and famous raises a thorny question: Whither the EV market when its Atlas shrugs?
On Tesla Inc.’s quarterly earnings call last week, Mr. Musk said the company would stop production of its model S and X cars. Instead of retooling affected plants to build new models, the factory space will be converted to build humanoid robots.
Mr. Musk, who is Tesla’s founder and chief executive, told investors that his Cybercab self-driving robotaxi would eventually be sold in numbers “several times more” than all other Tesla models combined.
While the models S and X are not huge contributors to Tesla’s numbers, the news of their demise – and the rosy projections for robotaxis – provided a hint that Tesla’s conventional EVs will become less and less of Mr. Musk’s focus going forward. That’s a stunningly sharp turn in his vision.
Tesla vehicles at a dealership in Buena Park, Calif., last month.Mike Blake/Reuters
There are a lot of practical reasons Mr. Musk may be falling out of love with EVs, starting with the continued declines in Tesla’s profit and sales.
Those numbers may provide some lessons to Canada. The Globe and Mail has reported that Ottawa will scrap its EV mandate, replacing it with tailpipe emissions standards, and will invest more in charging infrastructure and bring back consumer incentives. Ottawa is favouring the carrot over the stick, though Tesla’s results suggest there is no quick fix for the EV market.
Tesla’s adjusted income saw a double-digit decline in the last three months of 2025. Net income dropped 61 per cent in the quarter and 46 per cent for the year – a decline of more than US$3.3-billion.
Even more telling was the lack of buyer activity. The company reported its biggest drop ever in year-over-year sales volume in the fourth quarter and by far the biggest drop in annual sales in its history.
Waabi launching robotaxi fleet with Uber after raising US$750-million
Opinion: Self-driving taxis won’t be a traffic cure-all, and they ignore the real disease
Tesla’s earning have been in steady free-fall for nine of the last 10 quarters. The company’s annual income of US$12.5-billion last year was 30 per cent less that in its peak earnings year of 2022.
A big contributing factor in Tesla’s decline is growing competition from Chinese rivals, which are producing high-quality, technically advanced models at significantly lower sticker prices than Teslas or other EVs.
In a remarkable shift, last year Tesla lost its title as the world’s largest seller of EVs to China’s leading EV-maker, BYD.
Tesla has also been criticized for being slow to market with new models, a shortcoming many attribute to Mr. Musk being distracted by his many other projects, such as SpaceX, xAI and his disastrous foray into U.S. federal politics in the Trump administration.
Mr. Musk took a personal hit for his ties to U.S. President Donald Trump and his role as the de facto head of the Department of Government Efficiency.
Detractors took out their disapproval of Mr. Musk on Tesla vehicles in many global markets, where the cars were vandalized – and even firebombed.
The environment for EVs in the huge U.S. market has not helped. The Trump administration’s elimination of the Biden-era US$7,500 federal credit on EVs last fall stalled sales across the board – and not just for Tesla.
Analysis: With Chinese vehicles incoming, Ottawa faces thorny questions about how to spur EV sales
Major legacy automakers such as Ford Motor Co., General Motors Co. and Stellantis NV have all announced significant cutbacks in their EV programs.
To be sure, there is no shortage of reasons that Mr. Musk, who has a notoriously short attention span, may be cooling on what has been his bread and butter for years.
Look at SpaceX, his ahead-of-the-curve rocket-ship company meant to bring to reality his vision for commercializing and eventually colonization of space.
And look at xAI, Mr. Musk’s artificial-intelligence venture. In the Tesla earnings call, he revealed that the car maker would invest US$2-billion in xAI. And then there are humanoid robots and the Cybercab, which has no steering wheel or pedals.
Investors have already indicated they are bullish on Mr. Musk’s future vision, especially in space.
Ottawa, on the other hand, remains bullish on the future of EVs. It’s scrapping the unpopular mandate that forces manufacturers to make such cars, but it has not abandoned its long-laid plans of using taxpayer money to boost EV sales. It’s an open question how this plan will pan out.
The burning issue for the EV market more broadly is this: Love him or hate him, Mr. Musk has done more to drive the evolution of the market than anyone else. Without him, or even with less focus from him, will EVs thrive on a wave of Chinese-made products or become a footnote in automotive history?
link