Tesla faces scrutiny as 2026 begins, with EV sales faltering and BYD surpassing it as the top seller.Two questions hang over Tesla Inc. as 2026 kicks off: Will the company deliver on its seemingly impossible to fulfill pledges and will Chief Executive Officer Elon Musk continue to successfully negate the concept of pledges?
Apart from its share price, Tesla doesn’t enter the year on a roll. Its latest electric-vehicle sales numbers confirmed that the third-quarter’s spike was an anomaly fueled by consumers rushing to buy EVs before the US removed generous tax credits, and that Tesla relinquished its long-term position as the world’s biggest battery EV seller to China’s BYD Co.
Damning details abound, led by Tesla producing more vehicles than it sold in the October through December period for the fifth time in the past eight quarters. Expect weak automotive profit margins and cash flow when earnings for the fourth quarter drop later this month. Sales of premium EVs came in below 12,000 units. Think about that: Tesla is consistently selling far fewer premium EVs than it did in late 2023, when it boosted the lineup from two to three models with the launch of the Cybertruck. Capacity utilization across Tesla’s EV lines in 2025 was just 70 per cent — so much for the old claims about being “supply constrained.” As a counter, Tesla reported record deployments of batteries. That is positive but some perspective is needed. Through the first three quarters of 2025, gross profit in Tesla’s energy business increased by $836 million from the same period in 2024. Meanwhile, automotive gross profit fell by almost $2.2 billion. Meanwhile, Tesla attempted to get ahead of poor EV sales by, unusually, posting its own calculation of the consensus forecast to its website, which happened to be substantially lower than the one compiled by Bloomberg. It still missed.
The more pertinent point about that more favorable, company-curated consensus is that many Wall Street analysts cited it anyway in their post-sales reports. The Street has been conditioned to take what Tesla dishes out. The obvious inconsistency of an EV maker with two years of declining sales under its belt and a stock trading at more than 200 times forward earnings is glossed over by projections that Musk can make good on promises related to all things robotic.
How are those going? With robotaxis, few seemed to notice over the holidays that Tesla lost an important case in California. An administrative court ordered a temporary suspension of Tesla’s EV sales and production in the state after the Department of Motor Vehicles alleged marketing of its Autopilot driver assistance feature was misleading. Both suspensions were delayed, the latter indefinitely, at the DMV’s request, so this may seem inconsequential. But the case reinforces something that has been obvious for some time: Tesla has been over-pitching the autonomous capabilities of its vehicles for years.
Apart from the weight the ruling may carry in any other cases — Tesla is appealing another landmark case along similar lines that it partially lost in Florida in August — it should strike a dissonant note for investors. In July, Musk said on an earnings call that Tesla would “probably have autonomous ride-hailing in about half the population of the US by the end of the year.” Like so many such probabilities floated before, it didn’t happen. As 2025 drew to a close, it was effectively downgraded to simply pulling the safety monitors from front passenger seats in the company’s relative handful of rides in Austin, Texas, by year end.
While testing of such vehicles has begun, there has been no formal announcement of all monitors being withdrawn. Needless to say, there’s someone behind the wheel in Tesla’s San Francisco Bay Area ride-hailing service. Meanwhile, competition keeps mounting, the latest in the form of Nvidia Corp.’s new Alpamayo platform for vehicles to “reason” their way through road situations, with the first Nvidia-powered car due on US roads this quarter, according to the company.
And yet, by April, Tesla will apparently start ramping up production of its two-seat Cybercab, which is meant to be optimized for truly autonomous robotaxi service. Around the same time, Musk says Tesla should be unveiling version three of its Optimus humanoid robot, having hailed its “exquisite design.” The latter, along with a target to produce more than one million robots per year by the end of the decade and talk of an eventual 10 million-per-year production line in Texas is pretty much all anyone has to go on at this point.
Indeed, that is the most interesting point about the disconnect between Tesla’s faltering EV sales and its near-record stock price. It isn’t just that the lines have gone in opposite directions, but rather there’s a question of disclosure.
Last summer, Tesla hailed a “seminal point” in its “transition from leading the electric vehicle and renewable energy industries to also becoming a leader in artificial intelligence, robotics and related services.” This reinforced a narrative that was well-established in the share price, which is that Tesla isn’t an EV company but instead all about autonomy, AI and droids. And yet, if so, why is so much of the company’s reporting centered on EVs?
Every quarter, Tesla discloses sales and then financial and operating data related to making and selling vehicles. But the take-up rate of subscriptions or sales of its supposedly game-changing Full Self Driving (Supervised) system? The number of robotaxis in operation and their rides, revenue, costs and safety figures? Detailed investment requirements and operating data or milestones for Optimus? These are, Musk says and many Wall Street analysts attest, the true foundations of Tesla’s $1.5 trillion valuation. Yet there is no detailed table of numbers for these like the one we get every quarter showing EV deliveries, leasing penetration, inventory days and even the amount of new chargers installed. Rather, there is a hodgepodge of mostly qualitative statements, occasional figures, charts and, of course, targets and aspirations.
Why, when it comes to hard, consistent data, not lead with the future rather than the (supposed) past? In June, we will reach the one-year anniversary of Tesla launching its “robotaxi” service in Austin. If progress between now and then maintains the stately pace of the past six months or so, an answer to that question should be obvious to all.
