Cars? Lol. It’s not about cars any more. That’s what Elon Musk wants you to believe about Tesla, a company that has falling sales, falling revenue, falling profit and a share price that is… nearly double what it was this time last year. “Autonomy is the story”, said Musk, CEO and largest shareholder in the firm, in a call with investors and analysts on Wednesday night, US time. He predicted “a fundamental transformation of the company”. The American electric vehicle company has hit a rough patch since the election of Donald Trump to his second term as president. Tesla’s image is indelibly tarnished by Musk’s political dalliances, of which Trump was not the worst. I refer here to the very public use of hand signals that make a casual observer think: “Oh, like the baddies in a WWII movie”. The company has been in damage control ever since Musk went on his political bender. After the great hand signal escapade, Mr Musk was even seen wearing a suit. He’s on his best behaviour. On the most recent call with analysts there was, for example, no audible signs that Musk had misjudged his medication dose. Nor did he yell at anyone. Despite some slurring of words and curiously long pauses, Musk hewed quite closely to normal business person behaviour. Why? His company is in trouble. It sells really only two models of car — the Model 3 and Model Y, which are only just distinguishable from each other. Just 3% of all cars it sells are Model S, Model X and the much-ballyhooed Cybertruck. Sales of Model 3 and Model Y are down 12% from a year earlier as Tesla’s market share collapses, particularly in Europe. Inventory of unsold cars is up sharply, and other than a possible cheaper version of the Model Y, no new models are on the horizon. So the company needs a new story. And Musk is ready to pivot. “Q2 2025 was a seminal point in Tesla’s history: the beginning of our transition from leading the electric vehicle and renewable energy industries to also becoming a leader in AI, robotics and related services,” the company said in its latest update. (If you think he’s not snickering over the double meaning of the word seminal you’re crazy. The guy makes jokes all the time, in all forums.) The plan is twofold. First Tesla will chase down Waymo, and put robotaxis on the streets all over the place. “We are being very cautious. We do not want to take any chances, so we are going to go cautiously. But the service areas and the number of vehicles in operation will increase at a hyper-exponential rate,” said Musk. Tesla’s robotaxis so far operate in a small area within one US city, using a “handful” of units. Waymo (owned by Google) operates in several cities and has for years now. Its autonomous taxis have driven 71 million miles and show safety benefits compared to human drivers. Nevertheless Musk expressed the view that Tesla is the leader in this field. “Tesla is by far the best in the world at real-world AI,” he said. “A clear proof point for that would be if you compare it to Waymo. Waymo’s car is beset with God knows how many sensors. Isn’t Google good at AI? Yes. But they are not good at real-world AI. Tesla is much better than Google. By far.” The little silence that followed that statement was a real joy for me. Could Tesla one day be the leader? Maybe. Is it now? Ha. Musk is trying out his patented “saying makes it so” trick again. But that’s not the only thing he is willing into existence. The company will develop a new humanoid robot, also powered by AI. It’s called Optimus. “It will be the biggest product ever,” Musk said. “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.” There are two main types of Elon Musk idea: batteries and tunnels. The batteries were a truly great idea — cars with batteries are the future. The tunnels (he dug one under Las Vegas convention centre) a comical flop. The purchase of Twitter was a tunnel-type idea. His Jew-hating AI assistant Grok is another tunnel-type idea. The electric semi-trailer? A tunnel-type idea. The Cybertruck? A tunnel-type idea. When you’re as rich as Musk you get to have lots of tunnel-type ideas, ones that don’t pan out, and still get regarded as a genius. The humanoid robots are a tunnel-type idea at best. They might even fall into a third category, rocket-powered roadster-type idea: the kind of product the company once talked about a lot but doesn’t actually manufacture. Nevertheless you can get a job in Palo Alto, California trying to design the humanoid robots. Pay range “$140,000-$420,000/annual salary + cash and stock awards + benefits.” It is unclear if your job description will include dressing up as a robot. When the company first “unveiled” this new product line in 2021 it was so far behind that it didn’t even have a usable prototype and just put a person in a spandex suit on stage. The big question for me is: why should a robot look similar to a human? Even highly specialised robots are only just barely good enough at their tasks. My Roomba makes mistakes just about every time, and all anyone is asking it to do is clean the floor without eating the curtains. An enormous non-specialised robot so heavy you can barely pick it up when it falls over? They might be fun but won’t be practical or cheap. I predict the humanoid robot project will be an expensive failure for Tesla. And the expense of turning a car company into an AI company is considerable. Tesla has dramatically increased its spending on capital as it tries to execute this pivot. All its free cash flow is now being invested in the big gamble. Musk has indicated the company will take on extra debt too, to help fund the robotaxis. Tesla is in a precarious position. Its share price is that of a company that delivers far more profit. Compare the pair. The sharemarket value of Alphabet (Google) is US$2.3 trillion and it generated profits of US$34.5 billion last quarter. The sharemarket value of Tesla is US$1 trillion and it generated profits of US$1 billion last quarter. If it had the same ratios as Alphabet it would be about 15 times more profitable. Musk indicated he predicts finances to worsen later this financial year, and early next year “We probably could have a few rough quarters. I’m not saying that we will, but we could. Q4, Q1, maybe Q2.” After that? All-conquering triumph. “I do think if Tesla continues to execute well with vehicle autonomy and humanoid robot autonomy, it will be the most valuable company in the world.” It only works if the robotaxi bet pays off.