Tesla Insiders Are Calling Its AI Future A Dead End

Musk's hype is rapidly fading.

Tesla Optimus — Tesla

Tesla sales have continued their downward trend despite the launch of the new Model Y. As such, Tesla is almost certainly unprofitable, just as it was back in the first quarter of 2025. However, Musk isn’t trying to revive Tesla’s EV business — quite the opposite, in fact. He appears to be completely abandoning it and betting the entire company’s future on AI. At Musk’s behest, Tesla has effectively dropped all its development projects to focus entirely on the self-driving Cybercab and AI robot Optimus, making these ventures the only viable route to growth. Unfortunately, there is a problem with this plan: not only is it moronic on its face, but even Tesla insiders who played pivotal roles in designing and creating the Cybercab and Optimus say it simply won’t work. In effect, this is Tesla itself acknowledging that Musk has forced the company down a dead end.

I have already covered the findings of Rohan Patel, Tesla’s former head of business development and policy internal analysis for the Cybercab, so if you want more details, read the article here. However, in short, he discovered that even if Tesla could get its FSD (Full Self-Driving) system and Cybercab to work, it wouldn’t be a moneymaker. Why? Two reasons: sales and operations.

Instead of operating Cybercabs, Musk effectively wants to sell them at cost or even at a loss, and then make money by selling access to the FSD software. This is odd, given that operating Cybercabs is theoretically far more profitable than selling them, and it makes significant issues like liability more obvious. But FSD is highly unpopular, with customers only using it 15% of the time, polls revealing that 77% of people don’t trust the system, and 48% of people believing it should be illegal. So, Patel realised that a vehicle that can only be operated by FSD, with no option to take back control, would not sell well at all. In fact, Patel advised Elon to abandon robotaxis and focus on affordable EVs instead.

Additionally, even if Tesla could sell enough Cybercabs to begin generating revenue from operations or selling licences to use FSD, Patel still revealed that it wouldn’t make any money. We don’t have the details of this analysis, but it is likely that the cost of operating and supervising this kind of AI on that scale is too high, as well as the cost of crash liability being too high. These are the same problems that have kept Waymo from reaching profitability for years. However, Tesla also has to contend with the fact that once FSD is rolled out to Tesla’s current models, the robotaxi market will be flooded, making robotaxis unprofitable.

Okay, so what about the Tesla Bot? Musk wants to sell ten million per year at $30,000 to replace factory workers. Surely, this is a direction in which Tesla can grow?

Well, just as Tesla’s AI makes FSD wildly dangerous, the same AI makes Optimus painfully unusable. And, just like Cybercab, even if that weren’t the case, it would still fail.

Tesla’s first Optimus lead, Chris Walti, who left the firm in 2022 (the same time as Patel — coincidence?), has publicly stated that humanoid robots simply don’t make any sense. He told Business Insider that the humanoid form factor isn’t “a useful form factor”. Like many robotics specialists, Walti points out that “most of the work that has to be done in industry is highly repetitive tasks where velocity is key” and that the humanoid form factor is really inefficient at this, particularly compared to a specialised robot. This is bad news, as Optimus is meant to replace repetitive industrial jobs. Think of it this way: why would you buy an Optimus to hoover the house when a Roomba can do it faster for a fraction of the cost? Or, as Walti put it, “We weren’t designed to do repetitive tasks over and over again. So why would you take a hyper-suboptimal system that really isn’t designed to do repetitive tasks and have it do repetitive tasks?”

Many robotic specialists have pointed this out for years. Specialised robots are often far cheaper to develop, build, and operate and are more reliable and efficient than general-purpose humanoid robots. Furthermore, specialised robotics frees them of the limitations of our biomechanics. Even the most advanced humanoid robot can’t weave cloth faster than an automated loom because of the limitations of its form factor.

This is why the robotics industry hasn’t tried to commercialise humanoid robots, despite huge leaps forward by the likes of Honda and Boston Dynamics. It has been painfully clear they are too expensive and too incapable to be profitable. But this is the first time we have heard the higher-ups within Tesla recognise what the rest of the world has known for well over a decade.

So, can Tesla sell millions of Optimus robots per year? Well, even the original designer doesn’t think so.

The tale of Optimus and the Cybercab shows that Musk doesn’t understand his customers, doesn’t understand how to commercialise technology, doesn’t understand basic business principles, doesn’t listen to experts he has hired, and, worst of all, doesn’t understand the limitations of the technology he is selling. And that has led Tesla here — with vehicle sales falling rapidly and the company racing to deliver robotaxis and humanoid robots, whose creators happily admit will never make a dime.

Why? Well, Musk needs to keep Tesla’s stock price artificially high. He has borrowed billions of dollars against them at that price, and if it falls, all these loans will be recalled, and his entire business empire will fall (read more about that here). Musk knows that Tesla can’t sustain this price with just electric vehicles. So, he’s pushing speculation; that’s it. He doesn’t care that the Cybercab or Optimus can’t be profitable — he just wants to impress investors. The Emperor’s clothes aren’t just non-existent; his giant skid marks are there for all to see.

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Sources: Yahoo, The Street, Futurism, Futurism, Will Lockett, Will Lockett, Will Lockett, Will Lockett, Will Lockett, Will Lockett