Even Elon Musk sounds unconvinced by Elon Musk

For years, Tesla CEO Elon Musk has had an uncanny ability to bend the stock market with little more than a promise, some vague gesturing — and maybe a tweet. His superpower? Conviction. That steely-eyed certainty that whatever he was pitching — electric semis, self-driving cars, robot butlers — wasn’t just coming. It was coming soon.

But on Tesla’s second-quarter earnings call Wednesday, that conviction wavered. Musk didn’t deliver the usual hype-fueled sermon. Instead, he sounded cautious. Muted. Almost... tired. “We’re in this, like, weird transition period,” he admitted. “Does that mean we could have a few rough quarters? Yeah, we probably could.”

That line landed like a splash of cold water. Analysts immediately picked up on it. David Meier, a senior investment analyst at The Motley Fool, told Quartz, “The tone of [Musk’s] voice was about as somber as I’ve ever heard it,” he said, noting that his timbre didn’t change even as he was talking about all the exciting things Tesla was promising. “Here’s my take on the no emotion: Right now, the business is just, it’s really struggling.” 

Share prices fell further and further in after-hours trading the longer that Musk talked on his company’s earnings call — and were down around 9% in much of Thursday trading. Tesla’s stock has long ridden high on promises of an autonomous future. But Wall Street is starting to notice that the future keeps arriving late — if it even arrives at all.

And now, even Musk isn’t selling the dream with his usual gusto.

The numbers don’t lie

Tesla’s second-quarter results were bleak. Revenue dropped 14% year over year to $22.5 billion, the company’s steepest decline in over a decade. Automotive revenue came in slightly above expectations at $16.66 billion, but margins continued to erode. Operating margin slipped to 4.1%, down more than two full percentage points from a year earlier. And free cash flow collapsed by 89% to just $146 million.

Tesla blamed the drop on rising capital expenditures tied to AI, battery, and robotics spending. But those investments, which are supposed to underwrite Tesla’s pivot from car company to AI juggernaut, have yet to pay off.

“Robotaxis are not going to do anything about a few rough quarters,” Forrester vice president and principal analyst, Paul Miller, told Quartz. “There is no way they will scale fast enough to move the needle over the next few quarters.”

For years, Musk has been teasing the imminent arrival of Tesla’s latest and greatest act. A mass-market EV. A driverless robotaxi fleet. A humanoid robot workforce. But now, even he seems to be recalibrating the timeline. Take the long-promised affordable Tesla. The company confirmed that volume production won’t start until the second half of 2025 — and it will just look like the Model Y. And in the shareholder deck, there was zero mention of Optimus, the company’s humanoid robot. But just last quarter, Musk claimed there would be thousands of the robots working in Tesla factories by the end of the year (and a million units per year in less than five years). Musk said on the call that the company is “evolving” the Optimus design to “the point where it is a phenomenal design” — but the company is still in version 2 or 2.5, not Optimus 3. And there are zero hints of when they might — actually — arrive at scale.

“It just did seem that little bit more realistic than what he was saying last time,” Miller said of Musk’s muted claims on the company’s robotics piece. “The previous announcement was all about thousands by the end of the year and millions very soon after that.” Miller added that Musk’s claims on the call that Optimus is walking around the company’s office are very different — and a lot less exciting — than the robots doing “useful, productive” work.

Even full self-driving (FSD), Musk’s perennial talking point and a large part of the company’s sky-high P/E ratio (175.64), came with caveats. A limited robotaxi pilot is underway in Austin, Texas, where about 10-20 camera-only vehicles are operating in geofenced zones with a safety driver in the passenger seat. That’s a far cry from the national network Musk once promised by 2020.

This continuing delay between the bold promises and the reality on the ground is starting to erode investor confidence. Meier said that one of Musk’s “superpowers” is “to basically say, ‘Hey, you know, this is a tough problem; we’re going to do our best to solve it. Let me give you a time frame. OK, let me push the time frame back a bit.' Now, to his credit, on many things, he has delivered, but it’s not within the time frame that you would expect.”

Analysts at Wedbush still see promise in the long-term AI story. In a Thursday note, Dan Ives wrote that Tesla is still making “solid progress” on autonomy, with a potential $1 trillion opportunity ahead. But even Ives had to admit the path is long: FSD expansion, he said, will stretch through late 2025; volume robotaxi deployment likely won’t arrive until 2026. Musk himself acknowledged regulatory hurdles still ahead, even as he floated aggressive expansion plans in San Francisco, Arizona, and the Netherlands — some of which regulators have said they haven’t even heard about yet.

But even that bullish Wedbush scenario won’t prop up Tesla’s next few quarters. Tesla’s EV sales are declining in key markets such as California and Europe, where the company once dominated. Chinese rivals such as BYD and XPeng are surging. And Tesla’s clean energy credit revenue — long a quiet profit booster — is starting to dry up. The company is also about to lose some key tailwinds. U.S. EV tax credits and international subsidies are phasing out. Tariffs are mounting. Tesla itself acknowledged these headwinds on the call, noting that the next quarter will see around $300 million in added costs from tariffs alone.

Right now, the Tesla-as-an-AI-company future remains deeply hypothetical. Meier said that “probably” half of Tesla’s value comes from the current business, while “probably” half comes from the company’s plans. “And it’s a monumental task to essentially create two new businesses — the robotaxis and the humanoid robot,” he said.

What’s left is a company in limbo.

Tesla has slowed R&D spending and lightly refreshed its aging lineup. “The auto segment is in decline, revenues are declining, there's no doubt about that,” Meier said. “And [Tesla doesn’t] have an immediate thing to pump them up and get them going in the right direction.” Meanwhile, the broader EV market is cooling, and hybrid sales are surging. 

“You’ve got to deliver growth — while you’re saying, ‘Here are the next things coming,” Meier said. On the call, Musk acknowledged the mounting challenges. He said there will be “some teething pains” as the world moves from a pre-autonomy era to one dominated by AI-driven, fully autonomous vehicles. The idea that Tesla’s future hinges on these ambitious projects isn’t in itself new. Musk has long been a master of projecting a future full of transformative potential. He teased a new “master plan” — but he’s already released three of those (in 2006, 2016, and 2023). Now, as the clock ticks past milestones, investors and analysts are increasingly starting to ask: Where is the actual progress?

“It’s like the fairy story ‘The Little Boy Who Cried Wolf,” Forrester’s Miller said. “The first time you say, ‘There’s a wolf, everyone wants to help you. The second time, they walk to help you. The third time, one person comes to help you. The fourth time, the entire town goes, ‘You’re lying.’”

A narrative in limbo

One of the biggest issues Tesla is facing right now might just be narrative fatigue. For more than a decade, Musk has promised a future just out of reach. For years, markets were happy to wait, fully invested in Musk’s promises and his ability to execute on high-profile ideas.

But the clock is ticking, and the dream remains largely unfulfilled. Tesla’s ability to continue pushing these audacious promises without delivering concrete, near-term results is increasingly strained. Every delay weakens the narrative that Musk has worked so hard to build. But delays are stacking up, and rivals are catching up. Even within the AI space, companies such as Waymo and Zoox are racking up real-world miles in real-world cities, at real-world levels — while Tesla is still chasing regulatory approval.

“The big unanswered question for Tesla is: Is a camera-only system good enough?” Miller said. “It clearly works. But does it work often enough in enough conditions for a very conservative regulator to say, ‘Yeah, OK, go on.’ Or are the regulators going to be more convinced by the arguments from Waymo and Pony and Zoox and all these others who are putting a variety of sensors onto the vehicle and saying cameras on their own aren't enough?”

Musk, ever the showman, still knows how to dangle a shiny object. The Tesla diner in Los Angeles — part charging station, part retro theme park — opened this month to fanfare. It has space-themed bathrooms and Optimus robots as display props (they’ll bring you popcorn.) But Musk’s side quests increasingly feel like a distraction. He’s floating a political party. He wants to talk about Grok, his AI chatbot. He wants to start a colony on Mars. And investors want him to focus on his company. 

“How do you manage three, possibly four, companies?” Meier asked.

He added that if Musk is “stretched too thin,” it’s crucial for him to be surrounded by great people who have bought into the CEO’s vision. “If that happens,” Meier said, “you could have the most valuable company in the world.” But for all of Musk’s talk of integration and grand plans, key departures from Tesla’s leadership team point to cracks in the execution. “Something must be not quite right,” Meier said. He added that “if you can’t get someone excited about your vision,” it might be time to wave a yellow flag.

Tesla still has strengths. It has cash, factories, brand recognition, and a devout user base. It has proven it can refresh its lineup and scale production. And if the long-promised affordable EV does arrive late this year, it could goose demand. Wedbush’s Ives said Musk acting as a “wartime CEO” to put Tesla “on an aggressive AI-focused strategy represents the biggest and best possible news” for investors. So some analysts are still excited about the company’s future. Musk made a few big claims of his own on the call — “If Tesla continues to execute well with vehicle autonomy and humanoid robot autonomy, it will be the most valuable company in the world,” he said — even if his heart didn’t sound as in it as it usually does when he’s pitching the future.

For now, the biggest surprise in this earnings season wasn’t Tesla’s margins or missed estimates. It was the man at the top. Musk didn’t promise the moon. He didn’t tweet a robotaxi timeline. He didn’t call anyone a regulatory wet blanket. Instead, he admitted that things are hard. That the next few quarters may be rough. And that even he isn’t sure when the payoff will come. It wasn’t exactly inspiring. But in many ways, it was the most realistic thing he’s said in years.