Tesla Inc (NASDAQ: TSLA) just posted its worst quarterly result in three years. Tesla shares are down more than 30% for the year to date.
It's been a challenging period for Tesla, with its share price suffering the biggest decline among the Magnificent 7 companies.
Backlash over CEO Elon Musk's political involvement has begun to show up in the numbers.
Deliveries fell last quarter. Automotive revenue dropped 20%, representing the steepest decline in years. Tesla also built 26,000 more vehicles than it sold, raising concern that further price cuts may be required to clear inventory.
The company is also losing market share. Tesla's main rival, Chinese car maker BYD Ord Shs A (SHE: 002594), has been gaining traction lately. For the second straight quarter, BYD beat Tesla in deliveries, shipping 80,000 more vehicles than Tesla.
Tesla's market share in California's EV market also dropped to 44% from 56% a year ago. This was its sixth straight quarterly decline. Evidently, things are not looking good for its EV sector.
Look to the future
However, Tesla is more than just a car company.
With a market capitalisation above $800 million, the market is betting on Tesla's future rides on (pun intended!) autonomous driving and robotics.
The success of autonomous driving is crucial to Tesla's future.
On the investor call, CEO Musk predicted that there will be "millions of Teslas operating fully autonomously in the second half of next year". This bold vision has given Tesla enthusiasts plenty to be excited about. However, given that Musk also predicted six years ago that there would be millions of robotaxis by 2020, it's understandable that some investors remain sceptical.
Tesla has also been increasing production of Optimus, its humanoid robot. Optimus is designed to perform a range of tasks, including lifting objects, walking, and manipulating items autonomously. Tesla expects this to assist humans in a variety of settings, including cleaning, elder care, and manufacturing. If successful, Optimus could be revolutionary.
While Optimus has made notable progress, cost pressures remain a challenge. Musk has priced the innovation at $20,000. However, with Chinese components now threatened by Chinese tariffs, this goal may be out of reach.
On the subject of Optimus, CEO Elon Musk recently reflected:
We're making good progress in Optimus. We expect to have thousands of Optimus robots working in Tesla factories by the end of this year, doing this more. And we expect to scale Optimus up faster than any product, I think, in history to get to millions of units per year as soon as possible. I feel confident in getting to a million units per year in less than five years, maybe four years.
Tesla plans to build 5,000 units by the end of this year and scale to 50,000 by 2026. Longer term, Musk expects to reach 1 million Optimus humanoids by 2030.
Foolish Takeaway
Tesla shares have struggled this year, with EV demand falling and competition rising. However, Tesla has other initiatives. For Tesla to beat the market over the next five years, notable progress in autonomous driving or robotics is crucial.
