IS THE 2025 SUBARU BAJA REAL?

For much of the past decade, Tesla has defined the modern electric vehicle revolution. But in recent months, an uncomfortable question has become harder to ignore: does Tesla still see itself as a car company at all?

That question loomed large during Tesla’s latest quarterly earnings call, where Elon Musk and senior executives appeared to all but confirm what critics have long suspected. Tesla’s future, they suggested, lies less in building and selling cars—and far more in artificial intelligence, autonomous systems, and humanoid robots.

In one of the most striking moves yet, Tesla quietly ended production of its original flagship vehicles, the Model S and Model X, vehicles that once symbolized the company’s technological edge and luxury ambitions. Their exit makes room, executives say, for an entirely different priority: scaling up production of Tesla’s Optimus humanoid robot, a project that still struggles to perform basic tasks without human assistance.

At the same time, a top Tesla executive urged investors to stop thinking of the company as an automaker altogether, framing Tesla instead as a “transportation as a service” provider. Musk reinforced the message with a familiar refrain: in the long run, people won’t be driving cars at all.

“The vast majority of miles traveled will be autonomous in the future,” Musk said. “Probably less than 5 percent of miles driven will be where somebody’s actually driving the car themselves—maybe as low as 1 percent.”

Moments later, he went further. “Long-term,” Musk said, “the only vehicles we’ll make will be autonomous vehicles.”

A Car Company in Name Only?

On paper, Tesla is still very much in the car business. In 2025, the company reported $94.8 billion in revenue, with $69.5 billion—about 73 percent—coming from vehicle sales. But the trend lines tell a different story. Automotive revenue fell 10 percent year over year, while Tesla’s non-car businesses—energy generation, battery storage, and services—continued to grow.

Tesla has also lost its crown as the world’s largest EV seller, overtaken by China’s BYD. Meanwhile, its two remaining mass-market vehicles, the Model 3 and Model Y, are seeing declining demand despite refreshed designs and attempts to introduce cheaper variants.

The broader market isn’t helping. EV subsidies and tax incentives that once fueled demand are being rolled back in multiple countries. Musk himself played a role in that shift through political donations and vocal support for Donald Trump, moves that have alienated parts of Tesla’s historically progressive customer base. Combined with Musk’s increasingly polarizing public persona, the Tesla brand has lost some of its former shine.

Betting on Subscriptions and Software

Like many technology companies before it, Tesla is increasingly turning toward subscription-based revenue. For the first time, the company disclosed that it has 1.1 million active Full Self-Driving (Supervised) subscriptions, a 38 percent increase from late 2024.

Musk recently announced plans to stop selling Full Self-Driving (FSD) as a one-time purchase and move to a subscription-only model. While FSD enables hands-free driving in many scenarios, drivers must still monitor the road and remain ready to intervene. Tesla’s autonomy claims have repeatedly drawn scrutiny from regulators, lawsuits from consumers, and investigations over safety and marketing practices.

Still, Musk remains convinced that autonomy—and robotaxis in particular—will define Tesla’s future. He claimed Tesla’s autonomous taxi service will launch in “dozens” of U.S. cities this year, a scaled-back promise compared with earlier projections. He also teased a third-generation Optimus robot, which he says could be ready for mass production by late 2027.

The Trillion-Dollar Incentive

Autonomy is not just a technological obsession for Musk—it’s central to his compensation. Under a controversial pay package, Musk stands to earn up to $1 trillion if Tesla meets a series of aggressive milestones, including deploying more than a million robotaxis, producing a million humanoid robots, and generating $7.5 trillion in shareholder value.

Notably, the plan does not require Tesla to dramatically expand car sales. If Tesla averages 1.2 million vehicles sold annually over the next decade, Musk would still qualify for massive stock awards—fewer cars per year than Tesla sold in 2024. In effect, declining vehicle sales are already baked into the deal.

Board Approval and Growing Doubts

Tesla’s board and major shareholders have consistently backed Musk’s vision, despite mounting evidence that the company is lagging behind competitors in key areas. Waymo’s robotaxis operate with fewer incidents, while federal crash data reported by Electrek suggests Tesla’s autonomous vehicles crash at higher rates than human-driven cars—even with safety drivers present.

Optimus robots, meanwhile, remain largely dependent on remote human operators. Musk himself admitted during the earnings call that Optimus is not yet meaningfully deployed inside Tesla’s own factories.

Still, Tesla’s pivot away from traditional car manufacturing reflects a broader industry trend. Automakers increasingly talk about “software-defined vehicles,” promising continuous improvements through over-the-air updates—and recurring revenue through paid features. Compared with the capital-intensive, low-margin business of building cars, subscription software looks irresistible.

A Risky Transformation

The problem is scale. FSD subscriptions, even if they grow, are unlikely to replace Tesla’s primary revenue engine anytime soon. And with the Model S and Model X gone, Tesla has fewer vehicles to sell at a time when it needs cash the most.

Pursuing robots and robotaxis isn’t cheap. Tesla expects to spend $20 billion in capital expenditures in 2026, more than double last year’s spending. The money will go toward Cybercab production lines, the long-delayed Semi truck, Optimus robots, and new battery and lithium facilities, according to CFO Vaibhav Taneja.

Toward the end of the earnings call, Musk conceded that much of this spending is being driven by necessity rather than strategy.

“Why do we have to build these things?” Musk said, referring to lithium and cathode refineries. “Can someone else build these things? It’s very hard to build these things.”

The Identity Crisis Deepens

Tesla’s transformation is far from complete—and far from guaranteed to succeed. For now, the company still depends on selling cars to survive. But its leadership increasingly behaves as though that era is already over.

Whether Tesla can successfully reinvent itself as an AI and robotics powerhouse remains an open question. What is clear is that the company is drifting further away from the business that made it famous—and profitable—in the first place.