Though production of the Model S and Model X—the oldest EVs on the market—ended this month, both the Model 3 and Model Y remain the world’s bestselling EVs. But Tesla’s overall sales volumes continue to slide; while the company sold 358,023 vehicles in Q1, it produced 408,386. That means more than 50,000 unsold Teslas are languishing on lots somewhere.

Full Self-Driving Still Isn’t Living Up to the Name

Meanwhile, the long promised Full Self Driving is still anything but, with Musk admitting on the earnings call the Hardware 3 computer fitted to about four million Teslas “simply does not have the capability to achieve unsupervised FSD.” Which is tough luck for the 1.1 million Tesla owners who paid for a feature their cars can never have. And while Tesla engineers continue to futz with self-driving Tesla Cybercab prototypes, rivals such as Waymo, China’s Baidu, and Mate Rimac’s Verne are already operating commercial robotaxi services in cities in the U.S., China, the Middle East, and Europe.

Tesla’s New Race: Catching Faster, Hungrier Rivals

The promised investment in AI and robots sounds cutting edge, but in reality Tesla is playing catchup. Chinese automakers such Xpeng, Geely, and BYD are already spending billions on both AI and humanoid robots. When pressed, Musk was uncharacteristically cautious about the rollout of Optimus, which was first unveiled back in August 2021. “I don't know what the production rate of Optimus will be this year,” he acknowledged. “When you have a brand-new product and an entirely new production line, and you have 10,000 unique items, all of which have to go right to ramp production, it'll move as fast as the least lucky, slowest, dumbest part in the entire 10,000.”

By contrast Xpeng, which is based in Guangzhou, China, and was founded in 2014 by two former senior executives from Chinese carmaker GAC and Chinese tech billionaire He Xiaopeng, plans to have its AI-powered Iron humanoid robot in full mass production before the end of this year, and be selling a million of them annually by 2030. “Humanoid robots today are where electric cars were about 12 to 15 years ago,” says Sven De Smet, head of brand and marketing for Xpeng Europe, “but we will advance quickly.”

Humanoid robots certainly are the next thing in terms of a complex manufactured consumer product: De Smet predicts the global market could reach 20 million units a year within five years. And the systems and processes required to manufacture them at scale are not that different to those required to make modern automobiles. So, Tesla’s planned move into making robots makes sense. But can it compete with the likes of fast-moving Xpeng, which didn’t even exist when Tesla launched the Model S, or Hyundai-owned Boston Dynamics, which says it will soon begin shipping its Atlas humanoid robots to work in Hyundai factories?

Elon Musk talks a good game. But others are already playing it.