Tesla gave up the EV crown. Now it wants to win the autonomy race.

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Elon Musk’s “flying” Roadster jumped and flipped through the air this month in a stunt that went viral around the world. But his bigger bet is on changing the way Tesla makes money—and the wider car industry is scrambling to catch up.
Five days after the spectacle, made possible by compressed-gas thrusters developed by Musk’s SpaceX, he revealed the companies were exploring a merger that could accelerate his push into autonomous driving.
At stake is more than a technological race. Car groups, already grappling with growing Chinese competition, are seeking to move beyond a business model centered on vehicle sales towards one that also generates recurring revenues from software and AI-powered services.
“Automakers are starting to look in the mirror and the software piece is what they are all looking at as the golden goose, because the margins are so high,” said Dan Ives, a tech analyst and partner at merchant bank Yorkville Ives.
Even with Tesla’s strategic shift in recent years, its car business remains a crucial cash cow for the group, where it generates 75 percent of total revenues and will be pivotal for the heavy spending Tesla will need to make in AI to compete with its Big Tech rivals.
But Musk faces a vastly different competitive environment from 2008, when Tesla launched its first battery-powered Roadster. Chinese rivals are now winning the electric vehicle race while also investing heavily in software and AI to mount a tech challenge in autonomous driving.
Against that backdrop, Musk’s earlier goal to sell 20 million vehicles a year by 2030 has been watered down to 5 million, but even that is ambitious considering it only delivered 1.6 million last year.
Analysts said the near-term key to driving Tesla’s growth to 5 million sales would be its “Full Self-Driving” software, which, despite its name, still requires humans to sit in the driver’s seat and pay full attention.

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