Tesla slump burnishes Elon Musk’s futurist cred

A Model S is not an iPhone, a fact less obvious back in 2022. Then, electric-vehicle pioneer Tesla accounted for every dollar of profit generated from battery-powered rides. In that sense, it was similar to Apple, whose trailblazing smartphones became a recurring financial gift. The automaker's CEO, however, has been steering the $1.4 trillion company into artificial intelligence, self-driving and beyond, fantastical initiatives that look more prescient now.

Like Apple, Tesla has lost a crown. The company delivered 1.6 million cars last year, a nearly 10 percent drop from its 2023 peak. China's BYD eclipsed it by selling over 2 million battery-electric vehicles, Reuters reported. When the iPhone maker led by Tim Cook lost market share, however, it stayed immensely profitable. Apple accounts for 43 percent of worldwide handset revenue, Counterpoint Research reckons, despite slipping to 18 percent of shipments.

Tesla is different. Automotive revenue in 2026 is expected to dip 16 percent below its high, according to estimates gathered by Visible Alpha. The corresponding gross margin sits at half of 2022's level. As subsidies for battery-powered rides shrink or vanish and EV growth stalls, the company's operating profitability looks unremarkable next to rivals.

Even a futurist like Musk could not have envisioned all these shifts, especially ones instigated by Donald Trump's return to the White House. Other things were clearer. Tesla once held manufacturing advantages, like its giant die-casting machines, but they have since spread widely. Proprietary chargers are now accessible to rivals.

The iPhone's secret sauce is a connection to differentiated services and undergirding other industries. Musk's noodling over machine-learning and Optimus robots while abandoning efforts at a more reasonably priced vehicle might seem a concession that making cars is just too tough a business. Yet the technological advancements also point to something bigger.

Tesla's camera-reliant approach to self-driving diverges from competitors and depends on costly AI expertise. If successful, it would change what a car is. Meanwhile, the company's prodigious battery output powers electric grids. Energy storage is its most profitable business, with proliferating data centers bringing more potential customers.

These are the building blocks of a harder-to-break stronghold. Tesla shares trading at an astronomical 376 times estimated 2025 earnings implies a high degree of confidence in success. Musk has not shown a propensity for carefully polishing products to perfection, a philosophy that may prove too reckless. What could once be construed as the whims of a mad scientist, however, are now shaping up to be a more worthwhile experiment.

Tesla said on January 2 that it delivered 418,227 vehicles in the final three months of 2025, bringing the annual total to about 1.6 million, behind China's BYD, which sold more than 2 million battery-electric autos. The full-year figure represents a second annual decline for Tesla, from a 2023 peak of approximately 1.8 million deliveries.