Tesla's robotaxi miles shrink 36% as Musk tempers ambitions; stock plunges 14%

Robotaxi rollout hits reverse

Tesla's paid robotaxi miles fell to roughly 700,000 in the second quarter of 2026, a 36% decline from 1.1 million in the first quarter, according to a company chart released Wednesday. The drop came despite expansion to six cities across Texas and Florida, with service often limited to outlying areas. Crowdsourced data from the Robotaxi Tracker shows the unsupervised fleet remains tiny: 16 vehicles in Austin, 4 in Dallas, and 1 in Houston. Total cumulative paid miles stand at 2.5 million, including 380,000 miles without an in-vehicle safety monitor. By comparison, Alphabet's Waymo drives about 4 million autonomous miles a week and had logged more than 220 million miles through March.

It's an alarming decline.

Executives acknowledged the slow pace. Vice President of Vehicle Engineering Lars Moravy said regulations vary city by city, forcing a market-by-market approach. CFO Vaibhav Taneja said the company is working through "kinks" on software and operations and wants to resolve them with a small, controlled fleet before expanding. Musk added that Tesla needs to accumulate driving data specific to the Cybercab, its purpose-built two-seater, before putting many on the road.

Financial strain as free cash flow turns negative

Tesla reported negative free cash flow of $1.1 billion for the second quarter, its first such result in more than two years. Revenue rose 26% from a year earlier, but the company missed analysts' profit forecasts. The cash burn reflects heavy spending on AI and robotics infrastructure, even as the core auto business shows signs of strain.

Musk tempers Optimus ambitions

On the earnings call, Musk struck a notably cautious tone on the Optimus humanoid robot. He called it "the hardest product to scale manufacturing that we've ever made at Tesla" and emphasized the complexity of achieving dexterity and reliability. He dismissed demonstrations from competitors as preprogrammed or remote-controlled, insisting that "there is no humanoid robot that is actually able to do generalized tasks" and that Optimus will be the first.

The production scaling challenge is very substantial.

European sales provide a bright spot

Amid the robotaxi and profit woes, Tesla sold around 170,000 cars in Europe in the first half of 2026, a 55% increase from the prior-year period, according to data from industry body ACEA. The strong European performance helps fund the company's costly AI push.

Market punishes the stock

Tesla shares fell as much as 14% on Thursday, adding to a year-to-date decline of nearly 17%. The stock still trades at more than 166 times forward earnings, reflecting investor bets on future robotaxi and robotics revenue. Barclays analysts noted that Tesla's perceived scaling advantage has instead become a source of frustration for many investors.