01 Jan 2026, 06:44 PM IST i But while Tesla’s robotaxi prospects have captivated investors, car buyers have been relatively circumspect. Musk himself has acknowledged challenges persuading consumers to purchase what Tesla markets as Full Self-Driving, or FSD, a suite of features that still require human supervision. Allegations that Tesla is misleading Californians by exaggerating the automated-driving capabilities of its vehicles could lead to the state suspending the company’s sales license for 30 days early this year. Tesla’s attempt to distinguish itself in China’s crowded electric vehicle market with driver-assistance functions also isn’t working out, with companies including BYD Co. and Xiaomi Corp. offering similar systems as standard features. Due largely to BYD’s far higher sales in China and surge of momentum in Europe — where Tesla has been unable to obtain regulatory approval for FSD — analysts expect the Shenzhen-based carmaker to have sold more battery-electric vehicles worldwide for a fifth quarter in a row. Moving Forward After a widely anticipated annual sales decline — its second in a row — Tesla has more hurdles to contend with in 2026. The US has ceased offering federal tax credits for EV purchases and leases, which Musk has warned could lead to “a few rough quarters.” Some see a silver lining in the withdrawal of US policy support, which has led major manufacturers to pull back from EV investments. Ford Motor Co. said last month it expects to record about $19.5 billion in charges tied to abandoning EV and battery projects that were destined to lose money. Musk ended the year by building anticipation for Cybercab, a two-seat compact car with butterfly doors. While the prototype he first unveiled in late 2024 lacked a steering wheel or pedals, Tesla’s board chair Robyn Denholm told Bloomberg News in October that the company will sell the car with those components if required by regulators. “Investors have fully bought into his autonomous vision, which comes at a good time, as Tesla’s EV business will likely be flat to up 5 percent next year,” said Gene Munster, managing partner at Deepwater Asset Management. “At this point, Elon only needs the car business to stabilize over the next year to satisfy investors.” ALSO READ