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Elon Musk is doing a fantastic job of making dick jokes about the Tesla robotaxi service area in Austin, Texas, and siring babies, but when it comes to what supposedly is his day job — manufacturing and selling electric cars — he has been a miserable failure of late. Not that Musk cares. It is obvious he is so over the EV thing. His head is filled with visions of sugar plums as he cajoles his captive board into offering him a trillion-dollar payday.
Musk has clearly checked out from Tesla, as evidenced by the company’s total lack of new products — or intention to offer any. Instead, Musk says the company will all be about robotic humanoids and robotaxis going forward. The idiotic Cybercab concept is never going to see production, so those robotaxis will all be Model Y SUVs so far as anyone can tell. Oh, wait, we almost forgot — Elon wants Tesla to buy xAI, which is hemorrhaging money at the present time. We’ll talk more about that in a moment.
Tesla US Market Share In Decline
According to Cox Automotive, Tesla’s share of the EV market in the US has dropped to an 8-year low, with the company accounting for just 38% of US EV sales in August. That is a pretty severe drop for a company that at one time dominated the US market for electric cars with more than an 80% share.
Consumers are increasingly turning to Tesla’s competitors when purchasing an EV. In July, Hyundai, Honda, Kia, and Toyota reportedly had their EV sales rise by 60 to 120 percent. Volkswagen EV sales in America increased by over 450 percent in July compared to the previous month, thanks to “attractive” lease prices and free fast charging.
Preliminary data from August indicates Tesla’s market share in August sank to 38 percent — the first time that Tesla’s US EV market share has fallen below the 40 percent mark since October 2017 when production of the mass-market Model 3 first began. A month before, in July, its market share fell from 48.7% to 42%.
Overall, sales of new EVs in the US increased 24% month over month to 128,268 — motivated by the looming end of the $7,500 federal tax credit at the end of this month. Tesla saw its sales rise by 3.1% in August even while the market itself grew by 14%, which means Tesla could be on track for a second year of declining sales.
Where Are The New Tesla Models?
Tesla hasn’t launched a new model since 2023, when deliveries of the Cybertruck began (though, it was actually unveiled in November 2019, nearly 6 years ago). That must rank as one of the worst product launches since the Edsel. Even the modest refresh of the Model Y earlier this year has done little to stimulate new sales growth.
Stephanie Streaty, the director of industry insights at Cox Automotive, told Reuters she attributes this partially to Tesla’s increasing focus on non-EV products — building robotaxis and Optimus robots — while delaying or cancelling plans for cheaper EVs. “I know they’re positioning themselves as a robotics, AI company. But when you’re a car company, when you don’t have new products, your share will start to decline,” she said, and suggested legacy automakers are becoming increasingly competitive due to a sense of urgency from the deadline for the EV federal tax credit.
All of this should make for pretty depressing reading for Elon Musk and the Tesla board of directors, which this week floated a $1 trillion pay package for Musk if key valuation and production milestones are met. If Tesla hits these milestones, which include everything from increasing market share to mass producing robotaxis and Optimus robots, it would hand Musk another 12% of Tesla stock, bringing his total up to around 25%.
Some may question whether Tesla would really be a publicly held corporation with the best interests of its shareholders in mind at that point. It seems more like Tesla would be Musk’s private fiefdom, with shareholders just along for the ride. Still, if Musk succeeds in boosting the market value of the company by a factor of eight, any shareholders who stick around for the ride will probably have a big smile on their faces.
xAI Or Not xAi, That Is The Question
That trillion-dollar compensation package for Musk will be put to a vote at the annual Tesla shareholders meeting in November. Also on the agenda will be a non-binding vote on whether Tesla should invest in xAI, Musk’s artificial intelligence venture. The proposal was submitted by a longtime shareholder, who argues that the two companies are natural partners: Grok, xAI’s chatbot, is already inside Tesla vehicles, and a closer tie could cement access to talent and technology critical for self-driving, robotics, and energy, Bloomberg‘s tech reporter, Edward Ludlow, wrote this week.
“On paper, it looks like a simple synergy story. But the backdrop is messy,” Ludlow said. “xAI is burning cash at a furious rate — as much as $1 billion per month, according to Bloomberg — while trying to own its computer infrastructure outright. That strategy is capital-intensive in a manner more extreme than even cash-rich AI companies like OpenAI and Anthropic use. Instead of buying their chips, they usually lease them.”
Buying 100,000 Nvidia GB200 server systems costs around $10 billion. Musk has spoken openly about wanting as many as 1 million of Nvidia’s pricey and powerful systems, which would cost something like $100 billion. “Even with its latest model, Grok 4, xAI seems to have more marketing claims than clear commercial wins,” Ludlow wrote.
Investors are hearing different stories. Musk says the company doesn’t need more funding, even as people informed about its inner workings say xAI is trying to raise another $10 billion at a $200 billion valuation. Musk said on his personal antisocial platform in July, “If it was up to me, Tesla would have invested in xAI long ago.”
The push to get this issue in front of Tesla shareholders has been unusually intense, Ludlow wrote. Retail investors lobbied hard, and publicly, to get it onto the annual meeting agenda. Institutional investors and Wall Street analysts may take a more skeptical view of the relationship. The Tesla board has yet to take a position on the proposal, which could unlock the funding xAI needs to compete successfully with OpenAI and others.
The question appears to be whether it is better to fund xAI or put resources into new vehicle models? How cool would it be if Tesla actually brought an electric delivery van to market or a real midsize pickup truck? Do you think such new products would energize Tesla’s share price?
Yet, Musk seems to have no enthusiasm for being the head of a car company — the continued loss of market share with no plan to stop the bleeding makes that crystal clear. From one perspective, xAI seems like a distraction for a man who is already dangerously distracted. Around our executive offices, we tend to think Musk should stick to his knitting and not go chasing after more rainbows. But then again, nobody asked us. That’s our opinion and worth precisely what you paid for it.
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