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Tesla’s long road to maturity teaches a hard lesson for electric vehicle startups
Elon Musk may be prone to incredibly optimistic release estimates for Tesla’s products, but there is one aspect of the company that the CEO has been very realistic on — the challenges involved in mass production. Over the years, Elon Musk has highlighted this point. In the Q2 2021 earnings call alone, Musk reiterated these challenges when describing just how difficult it was to ramp the production of Tesla’s custom 4680 cells. “Limited production is easy, prototype production is easy but high-volume production is hard. There are a number of challenges in transitioning from sort of small-scale production to large volume production,” Musk said.
Tesla is now a mature electric vehicle company, but it has not always been that way. Before its eight consecutive profitable quarters, Tesla was fighting an uphill battle, coming close to ruin more than once. Today, Tesla is a strong automaker, weathering the issues brought about by the chip crisis admirably and securing $1 billion quarterly profit for the first time in Q2 2021. That’s not bad at all for an 18-year-old company competing in one of the most unforgiving segments in the market.
One thing that may be forgotten today is just how long the road was for Tesla before it was able to secure the stable ground that it stands on today. This long, arduous road, paved with several trips through “production hell,” would likely be faced by other electric car makers as well. This would likely be especially true for companies like Lucid, which entered the stock market even before it delivered its first car to consumers.
There is a trend now among electric vehicle makers. Unlike Tesla, which went public after delivering the original Roadster to customers, other EV makers have gone public through special purpose acquisition companies (SPACs). This was the case for controversial hydrogen truck maker Nikola, which saw its stock climb rapidly before plummeting down as issues about its founder Trevor Milton emerged. Nikola is not alone in the SPAC trend, with companies like Lucid and Fisker also going public through SPACs.
As noted in a Bloomberg report, a good number of these EV makers have seen quite a bit of volatility. Nikola’s rapid rise and fall aside, companies like Faraday Future have exhibited volatility not long after they debuted on the Nasdaq. Faraday saw gains in its inaugural day of trading, for example, but the company saw a 23% drop over the next two sessions.
It’s almost expected now that new EV makers that enter the stock market through a SPAC would likely see notable gains and some steep losses. And now that they are publicly traded, management decisions and strategies would likely result in their respective stocks seeing some movement.
This was experienced by Lucid Motors. The SPAC that took Lucid public earlier this year saw dips in its stock after the EV maker postponed the initial production of its Air sedan, which CEO Peter Rawlinson explained was due to the pandemic. What is quite interesting is that Lucid is already one of the more prepared EV makers that are looking to follow Tesla into the mainstream auto segment, since it has a ready product and management that seems to have things in order.
Other EV makers that have gone public through SPACs, such as Nikola, Canoo, and Lordstown Motors, ended up experiencing management turmoil even before they went public. This means that many electric car companies, particularly those who may be entering the stock market through a SPAC, may very well have to learn a hard lesson about how difficult it is to transition from being a maker of EV prototypes to a mass manufacturer of electric cars that can stand beside Tesla in the mainstream auto market.
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Tesla stock (NASDAQ: TSLA) endured one of its sharpest single-day declines in years on July 23, tumbling approximately 14.5 percent and closing near $320 after opening the session around $374. The drop erased more than $140 billion in market value amid heavy trading volume and left the shares at multi-week lows.
The sell-off followed the company’s second-quarter 2026 results, released the previous evening. Tesla reported record revenue of $28.2 billion, up 26 percent year over year, driven by a Q2-record 480,126 vehicle deliveries. Energy storage deployments also rose strongly.
Tesla (TSLA) Q2 2026 earnings results: miss on EPS, beat on revenue
Yet profitability disappointed sharply. Operating income fell 57 percent to $398 million, compressing the operating margin to just 1.4 percent. Non-GAAP earnings per share came in at $0.33, well below the roughly $0.53 analysts had expected. Free cash flow turned negative by $1.1 billion as capital expenditures surged 142 percent to $5.8 billion, largely tied to accelerated spending on artificial intelligence, robotics, and autonomous systems.
The losses on capex were expected, as Tesla said it would be spending heavily in 2026.
Investors also reacted to lingering uncertainty surrounding key product timelines. During the Earnings Call, management reiterated ambitions for Robotaxi deployment and the Optimus humanoid robot, but offered limited new concrete milestones, renewing questions about execution pace that have long accompanied Tesla’s ambitious roadmap.
The magnitude of the decline places it among Tesla’s more severe one-day percentage losses since its 2010 initial public offering. Historically, the two largest single-day drops (split-adjusted) remain September 8, 2020, when shares fell 21.1 percent amid broader market volatility and valuation concerns, and January 13, 2012, with a 19.3 percent plunge during the company’s early growth struggles.
Other notable declines include an 18.6 percent drop on March 16, 2020, at the onset of pandemic-related market turmoil. Thursday’s move ranks roughly ninth on the all-time list but stands out as the steepest in more than a year.
Despite the short-term pain, Tesla’s long-term trajectory has repeatedly recovered from such volatility. The latest results underscore both the strength of its core automotive and energy businesses and the near-term costs of heavy investment in next-generation technologies.
Elon Musk clapped back at France’s decision to withhold the approval for Tesla’s Full Self-Driving (FSD) Supervised system, projecting a clear and blunt message to French Transport Minister Phillippe Tabarot, after he publicly rejected the technology in its current form.
Tabarot outlines several concerns with Tesla Full Self-Driving in a detailed video statement, where he said, “The safety trade-offs are not yet sufficient to authorize it as it currently stands,” he said. He emphasized that FSD is not a true self-driving system and that the driver remains fully responsible.
Key issues Tabarot also brought up included allowing speeding when surrounding traffic exceeds limits and what he believes are insufficient guarantees of driver attention during complex urban maneuvers such as lane changes, intersections, and roundabouts.
Delaying the approval of FSD in France will cost lives
— Elon Musk (@elonmusk) July 22, 2026
While acknowledging technological progress and France’s support for autonomous innovation, Tabarot stressed that deployment must prioritize road safety. He noted ongoing technical discussions with Tesla, the Netherlands, and other European partners, with further ecosystem meetings planned for the fall.
Musk’s rebuke highlights the human cost of regulatory caution. Tesla’s latest safety reports provide compelling data supporting accelerated adoption. In the most recent 12-month period, vehicles using FSD (Supervised) recorded one major collision per approximately 5.1 million miles driven, dramatically better than the U.S. national average of one crash per 698,000 miles.
Even Tesla vehicles driven manually with active safety features outperform the average by a wide margin. These figures come from billions of real-world miles of telemetry, showing FSD vehicles involved in far fewer incidents than both manual Teslas and the broader U.S. fleet.
Critics argue Tesla’s comparisons require careful scrutiny regarding reporting thresholds and fleet demographics, yet the data consistently positions FSD as a potential lifesaver. With road fatalities remaining a leading cause of death worldwide, Musk contends that proven safer technology should not face prolonged bureaucratic hurdles.
France’s measured approach reflects the broader European regulatory caution, which many, especially Musk, have been critical of in the past. However, as autonomous systems from Tesla and competitors like Waymo demonstrate superior safety in independent studies, pressure is mounting for harmonized approvals.
Musk’s warning carries the belief that every month of delay may equate to avoidable tragedies on European roads.
In a striking revelation that underscores the lucrative crossover between Big Tech and space exploration, Alphabet Inc., Google’s parent company, disclosed a massive $94.1 billion equity stake in SpaceX following the rocket company’s blockbuster initial public offering earlier this year.
The disclosure came in Alphabet’s quarterly filing, marking the first time the long-held private investment has been publicly valued at market prices. Google was an early backer, investing alongside Fidelity in 2015 with roughly $500-900 million at a time when SpaceX was valued around $12 billion.
That bet has delivered extraordinary returns, roughly a hundredfold, transforming a strategic play on satellite internet and launch capabilities into one of Alphabet’s largest assets.
Google, $GOOGL, has said they hold $94 billion in SpaceX, $SPCX, shares after IPO.
— unusual_whales (@unusual_whales) July 23, 2026
Of the total holding, approximately $80 billion remains subject to short-term post-IPO lockup restrictions, preventing near-term sales. An additional $14.1 billion faces longer-term restrictions, extending into the third quarter of 2027. This structure limits immediate liquidity but protects against market volatility as SpaceX transitions into public trading.
The SpaceX position contributed significantly to gains in Alphabet’s broader investment portfolio, which also includes a major stake in AI leader Anthropic. Combined, these holdings helped drive nearly $100 billion in investment gains during the second quarter, providing a substantial boost to net income amid ongoing AI spending pressures.
Analysts view the disclosure as validation of Alphabet’s venture strategy beyond its core search and cloud businesses. The investment aligns with deeper ties, including reported multi-billion-dollar deals for AI computing capacity on SpaceX infrastructure. As SpaceX advances Starship flights, Starlink expansion, and ambitious Mars goals under Elon Musk, Google’s stake positions it to benefit from the commercialization of space.
For Alphabet, the windfall highlights how patient, forward-looking bets in transformative sectors can yield outsized rewards. While lockups temper short-term impact, the holding cements SpaceX as a cornerstone of Alphabet’s diversified portfolio in an era where aerospace, AI, and connectivity increasingly intersect. Investors will watch closely as restrictions lift and SpaceX’s public performance unfolds.
Tesla stock tumbles after earnings, one of its sharpest single-day declines
Elon Musk is not happy about this Tesla Full Self-Driving approval delay
