Tesla Targets Autonomy Crown With FSD Growth and SpaceX Merger Plan
Tesla pivots from EV volume to FSD subscriptions as it explores a SpaceX merger, battles BYD and Xpeng, and seeks EU approval in a delayed December vote.
Summary
Tesla, overtaken by BYD as the largest EV maker last year, has cut Elon Musk’s 2030 sales ambition from 20 million vehicles to 5 million after delivering 1.6 million last year. Cars still provide 75 percent of revenue and must finance rising AI spending. Tesla says demand increasingly depends on supervised Full Self-Driving, which requires an attentive driver: more than 75 percent of new North American Teslas include it, active global subscriptions rose 67 percent to 1.7 million, and the US price is $99 monthly. FSD revenue remains undisclosed, but adoption could reshape Tesla’s finances if it rises from roughly 10 to 15 percent of global customers to 50 percent. Tesla also reported its largest vehicle order backlog in four years.
Regulation remains decisive. Tesla has no approval for fully autonomous FSD, while its supervised system has clearance in the Netherlands and several European countries. A member-state vote on wider EU deployment was delayed until December. Volkswagen-backed Xpeng is working with German authorities and wants early approval for XNGP after EU driver-assistance and autonomy rules expected early next year.
Five days after an October 2026 Roadster stunt using SpaceX compressed-gas thrusters, Musk disclosed that Tesla and SpaceX were exploring a merger. Combining them could pool AI, materials and manufacturing research, reduce costs and improve chip access, but shareholder and regulatory approval would be required, and William Blair analyst Jed Dorsheimer said Musk could control at least 50 percent. Rivals are responding: Xpeng, Hyundai and Toyota are expanding robotics; General Motors hired former Tesla executive Sterling Anderson for autonomous cars; BMW and Mercedes-Benz are developing monitored Level 2 plus systems with Qualcomm and Nvidia; Volvo plans door-to-door automation with Nvidia; and General Motors and Ford are pursuing energy-storage revenue.
Positives
- 1.7 million active FSD subscriptions represent 67 percent annual growth worldwide.
- More than 75 percent of new Teslas sold in North America include supervised Full Self-Driving.
- Tesla’s vehicle order backlog has reached its highest level in four years.
- A 50 percent global FSD adoption rate could contribute more than selling an additional 50,000 to 100,000 cars annually.
- A SpaceX merger could combine AI, materials and manufacturing research while lowering costs and improving chip access.
Risks & concerns
- Tesla delivered 1.6 million vehicles last year, far below its reduced 5 million target for 2030.
- BYD displaced Tesla as the world’s largest electric vehicle manufacturer last year.
- Tesla has not secured approval anywhere for fully autonomous Full Self-Driving.
- The EU vote on wider supervised FSD deployment has been delayed until December.
- A Tesla and SpaceX merger could spread AI-related financial risks across both businesses and give Elon Musk at least 50 percent control.