All In with No Plan B

Musk’s Bet on Tesla’s Future

Tesla’s Cybercab launch event last Thursday was, at least at first glance, somewhat disappointing.

It was supposed to be a historic moment for Tesla: the company’s first vehicle designed from the ground up without a steering wheel or pedals was beginning to carry passengers on public roads. But anyone expecting a typical Tesla event, with a huge stage, a global livestream, dramatic announcements and Elon Musk at the center of it all, got almost the opposite.

The event was closed to a relatively small group of guests, primarily influencers, bloggers and members of the Tesla community. Reports indicated that roughly 250 outside guests attended alongside about 250 Tesla employees. There was no major public broadcast, the main presentation was brief and, most surprisingly, Elon Musk himself did not attend.

The announcements were modest as well.

There was no new production target involving millions of vehicles, no detailed timetable for nationwide expansion, and no date for when consumers might be able to buy a Cybercab.

But one very important thing did happen:

The Cybercab started driving.

A two-seat vehicle with no steering wheel, no pedals and no human driver entered limited service in Austin.

And that may ultimately matter far more than a spectacular launch event.

To understand the Cybercab, we first need to understand what happened to Tesla

In recent years, one question has become increasingly difficult for Tesla investors to ignore: what happened to Tesla’s growth?

In 2021, the company delivered approximately 936,000 vehicles.

In 2022, deliveries increased to about 1.31 million.

In 2023, they reached approximately 1.81 million.

Then the growth stopped.

Deliveries slipped to about 1.79 million in 2024 and declined again to approximately 1.64 million in 2025.

In just two years, Tesla went from a company increasing vehicle sales by tens of percent annually to one selling fewer cars than it did at its 2023 peak.

That is also one reason Tesla shares have failed for nearly five years to establish a new high above their November 2021 peak, despite enormous volatility along the way.

This creates an apparent contradiction.

Tesla continues to be valued by the market as an extraordinary technology and growth company, yet its traditional automotive business no longer demonstrates the growth rates that once helped justify that valuation.

So why doesn’t Tesla simply build a smaller, cheaper electric car that could potentially sell millions of units per year?

Perhaps because Musk is no longer trying to solve that problem.

He is trying to solve a much bigger one.

Tesla is not betting on another car. It is betting on the end of human driving

From Musk’s perspective, Tesla’s future does not depend on another version of the Model Y or even on a cheaper conventional electric vehicle.

It depends on whether Tesla can solve fully self/autonomous driving (FSD).

If it succeeds, Tesla could fundamentally change the economics of transportation.

If it fails, Tesla risks remaining primarily an electric vehicle manufacturer. It could still be large, technologically advanced and profitable, but it would be competing in a market where BYD, other Chinese manufacturers, Volkswagen and many others are increasingly capable of producing excellent electric vehicles.

The Cybercab, therefore, is not simply another Tesla model.

It is Musk’s bet on Tesla’s future.

All In with No Plan B

This is one of the most unusual characteristics of Musk as an entrepreneur and manager.

Musk, arguably one of the most consequential entrepreneurs and industrialists of the modern era, repeatedly chooses extremely difficult problems and then deliberately eliminates the escape routes.

We saw this at SpaceX.

For decades, the space industry largely accepted rockets as disposable machines. Musk instead built SpaceX’s strategy around recovering major rocket stages, landing them and using them again.

For years, the idea seemed almost absurd. Rockets crashed. Tests failed.

But Musk did not settle for incremental improvements to the traditional launch industry. He made reusability a fundamental part of SpaceX’s economic model.

Eventually, the gamble worked and transformed the economics of space launches.

Now he is attempting something similar at Tesla.

The debate inside Tesla: should there be a steering wheel?

One of the most important moments occurred in August 2022.

As Walter Isaacson describes in his biography of Musk, an intense internal debate took place at Tesla over the company’s next-generation vehicle.

Tesla’s engineers proposed a very logical solution.

Build a new, inexpensive car with a steering wheel and pedals, but design it so those controls could eventually be removed.

If autonomous driving were delayed, Tesla could sell it as a conventional car.

If regulators were not ready, humans could still drive it.

And once autonomy was ready, the driving controls could be eliminated.

From a business perspective, it was an excellent Plan B.

Musk rejected it.

He wanted a vehicle with no steering wheel and no pedals.

Not a vehicle in which autonomous driving was an optional feature, but one that had no reason to exist without autonomous driving.

If the computer cannot drive, the car cannot function.

It is an extreme decision.

But from an organizational perspective, it is also a fascinating one.

When there is no Plan B, Plan A has to work

If the Cybercab had a steering wheel, every engineer at Tesla would know that even if autonomous driving were not ready on schedule, the company could cope.

Tesla could still sell the car.

Autonomy could be delayed another year, and perhaps another year after that.

But when you build a car without a steering wheel or pedals, there is no easy intermediate solution.

Either Tesla solves autonomous driving, or the product does not work.

Musk has transformed an engineering objective into something close to an existential mission.

That is the central point.

The Cybercab is not merely a car.

It is a mechanism designed to force Tesla to succeed in autonomous driving.

OpenAI and Anthropic show the power of an existential mission

We can see a similar phenomenon in today’s artificial intelligence race.

Google has enormous financial resources, data centers and engineering talent. Microsoft has vast resources of its own, and Meta is investing extraordinary sums in AI infrastructure.

Yet much younger companies such as OpenAI and Anthropic managed to move to the forefront of the large language model revolution.

One possible reason is focus.

For these companies, the AI race is existential.

If Anthropic were to lose the AI model race completely, it does not have YouTube, a search engine, Android, a huge advertising business or a massive cloud business to fall back on.

Much the same applies to OpenAI.

These companies effectively know:

If we fail here, there may be no company.

Google is different.

If Google loses one generation of language models, it is still Google. It still has Search, YouTube, advertising, Cloud, Android and a huge ecosystem of other products.

That gives Google extraordinary strength, but it also gives it an enormous safety net.

And when an organization has a safety net, it is much harder to create a genuine sense of "succeed or cease to exist."

Musk is trying to make a trillion-dollar company behave like a startup again

This is one of the fundamental problems facing every successful corporation.

As companies grow, they accumulate more products, more managers, more processes and more alternatives.

They become more stable, but they often become slower as well. They can lose the obsession and urgency that made them successful in the first place.

Musk appears to be fighting that tendency in an extreme way.

He is taking a company worth more than a trillion dollars and trying to put it back into the psychological state of a startup:

We have to solve this problem.

That is precisely what the Cybercab does.

No steering wheel. No pedals. No driver.

No easy fallback.

Musk appears to be doing the same thing with Optimus

To understand how profound Tesla’s transformation has become, consider what is happening at the Fremont factory.

The Model S and Model X played a crucial role in building Tesla.

The Model S, launched in 2012, demonstrated that an electric vehicle could also be a highly desirable luxury car.

The Model X expanded Tesla into the SUV market.

But in January 2026, Musk announced that it was time to bring both programs to an end and use their production space at Fremont for Optimus.

Tesla has since dismantled the Model S and Model X production lines and is installing its first major production line for the humanoid robot. The company’s long-term ambition for the Fremont line is production capacity of up to one million robots per year.

The symbolism is difficult to miss.

Musk is taking factory space that produced two of the vehicles that helped make Tesla what it is today and reallocating it to robots.

The message is clear:

Tesla’s future is not just about cars. It is about physical AI.

An autonomous vehicle is a robot on wheels.

Optimus is a robot on two legs.

Both rely on artificial intelligence that perceives the physical world, understands it and makes decisions within it.

The Cybercab is not a car with the steering wheel removed

This distinction is critical.

It is easy to imagine that Tesla simply took a small car and removed the conventional driving controls.

The engineering logic is actually the reverse.

Tesla begins with one fundamental assumption:

There is no driver.

Then it designs backward from that assumption.

For more than a century, almost everything inside an automobile has been designed around the human being operating it: the steering wheel, pedals, instrument panel, mirrors, controls, seating position and many other systems.

Once there is no driver, entire systems can be eliminated or redesigned.

Tesla is not removing the steering wheel.

It is attempting to eliminate the need for one.

A Model Y equipped with autonomous-driving software is still fundamentally a vehicle designed so a human can drive it.

The Cybercab starts with a clean sheet.

Removing the human driver can reduce parts, weight and complexity and allow Tesla to rethink the vehicle’s internal architecture.

That leads to an important distinction:

The Cybercab is not a conventional car converted into an autonomous vehicle. It is a vehicle designed from the beginning for an autonomous world.

From driver to passenger

The experience inside the car changes as well.

In a conventional vehicle, we talk about steering feel, pedal response, visibility and driving dynamics.

When nobody is driving, the priorities change.

The emphasis moves toward comfort, space, quiet, entertainment, communications and the ability to work or relax while traveling.

The vehicle is no longer primarily a machine operated by a human.

It becomes a space that transports a person from one location to another.

Tesla is also redesigning the factory

Tesla is not only trying to reinvent the automobile. It is trying to reinvent the way the automobile is manufactured.

The Cybercab is designed around Tesla’s new "unboxed" manufacturing approach.

In a traditional automotive factory, a vehicle body moves along a production line while components are added sequentially. Under the new approach, major sections of the vehicle can be assembled in parallel and joined later.

The objective is to reduce manufacturing steps, movement of workers and materials, production time and part count.

Tesla ultimately wants a smaller, more efficient factory capable of producing enormous volumes at substantially lower cost.

But the Cybercab introduces another potentially important manufacturing innovation.

Painting is one of the most complex and expensive processes in an automobile factory. A modern paint shop is a massive industrial operation involving surface preparation, cleaning, corrosion protection, multiple coatings, ovens, drying, quality control and environmental systems.

Tesla is attempting to eliminate a significant portion of that process.

According to the design that has been disclosed, the Cybercab uses special polymer body panels in which the color is incorporated into the material itself. Instead of manufacturing a metal panel and sending it through a lengthy painting process, the component can emerge from production already in its final color.

The implications could be substantial.

Fewer production stages.

Less drying time.

Lower energy consumption.

Less paint-related equipment and infrastructure.

Potentially simpler repair of minor scratches because the color is not merely a thin surface coating.

The larger idea is more important than any single saving.

Tesla is reconsidering the entire manufacturing chain and asking a basic question about every process:

Do we need this at all?

If you do not need a driver, eliminate the steering wheel and pedals.

If the car does not have to be assembled sequentially, redesign the assembly process.

If the body material itself can provide the desired color, eliminate as much of the traditional painting process as possible.

This is a recurring Musk principle: before optimizing a process, ask whether the process can simply be deleted.

And that matters because Musk’s ambition is not to manufacture one hundred thousand expensive Cybercabs.

The ambition is to create a simple, reliable and inexpensive transportation unit that can ultimately be produced in the millions.

If it works, the Cybercab is only the first vehicle

This is where the strategic implications become much larger.

If Tesla can prove three things, autonomous driving, a vehicle architecture designed without a human driver, and a radically cheaper manufacturing system, there is no reason to stop with the Cybercab.

The same underlying platform could eventually support an entire family of vehicles.

A small urban vehicle, a family vehicle, a larger passenger vehicle, group transportation and delivery vehicles could all be designed around the same fundamental assumption:

The human does not drive.

This could eventually become the path that returns Tesla to growth measured in millions of additional vehicles, not by introducing another conventional model but by creating an entirely new category of transportation.

Tesla has been preparing for this moment for more than a decade

This is also why the relatively disappointing event last Thursday may be misleading.

In 2024, the Cybercab was a promise.

Last Thursday, on a still very limited scale, it became a vehicle carrying passengers without a steering wheel, pedals or human driver.

Tesla no longer needs another spectacular presentation as much as it needs to prove that the system works reliably and can scale.

And Tesla has one potentially important advantage if it succeeds in solving the remaining software and regulatory challenges.

The company has been developing autonomous-driving technology for more than a decade while simultaneously putting millions of vehicles on the road equipped with cameras, computing systems and hardware designed to support increasingly advanced autonomous capabilities.

Tesla is therefore not beginning this effort today.

It has accumulated years of engineering experience, enormous quantities of real-world driving data, experience training models on difficult and unusual situations, and a vehicle architecture built around the long-term autonomous-driving vision.

If the software eventually reaches the necessary level of reliability and regulators approve widespread driverless operation, that accumulated investment could become a significant competitive advantage.

Tesla would not need to invent the software, vehicle hardware, manufacturing system and distribution base simultaneously. Much of that infrastructure already exists on the road and inside its factories.

And the Cybercab itself has been designed to be inexpensive and manufacturable at enormous scale.

The biggest bet in Tesla’s history

We may be witnessing the most important transformation in Tesla’s history.

The company that began by building electric cars is attempting to become a physical AI company.

Autonomous driving is one expression of that strategy.

Optimus is the other.

In both cases, Musk is following the same playbook.

He is shutting down the Model S and Model X production lines to make room for Optimus.

He is building a Cybercab without even a steering wheel as a fallback if autonomy fails.

And he appears willing to tolerate years of stagnating vehicle growth while Tesla redirects its resources toward these two enormous opportunities.

It is an extraordinary gamble.

But this may also help explain Musk’s unusual record as an entrepreneur and industrialist.

Few modern industrialists have influenced as many fundamental industries.

Tesla helped turn electric vehicles from a niche product into a major American industry while building large-scale battery manufacturing, energy storage and charging infrastructure.

SpaceX restored American leadership in launch technology and transformed the economics of spaceflight through reusable rockets.

Now Musk is investing heavily in artificial intelligence, enormous computing infrastructure, robotics and increasingly specialized chips.

His companies do not merely enter industries.

They frequently attempt to rebuild those industries around a different set of assumptions.

If autonomous driving and Optimus fail, critics will be able to argue that Musk sacrificed valuable years in which Tesla could have developed cheaper conventional vehicles, expanded its lineup and defended its position against increasingly capable Chinese competitors.

But if both projects succeed, today’s stagnation in automotive sales may eventually look like a temporary transition between two very different versions of Tesla.

The first Tesla built electric cars.

The second Tesla wants to build intelligent autonomous machines, some on four wheels and others on two legs.

Conclusion

Tesla’s traditional automotive business is no longer growing at the rate that once defined the company. Vehicle deliveries peaked in 2023 and have since declined. Musk is betting that Tesla’s next major growth engine will not be another cheaper conventional model, but autonomous driving and physical AI.

The Cybercab embodies that strategy. By eliminating the steering wheel and pedals, Tesla deliberately removes the easy fallback to human driving. The company has to make autonomy work.

The vehicle itself is being redesigned around a world without drivers. The passenger compartment, controls, architecture and manufacturing system can all be reconsidered from first principles.

Tesla is attempting to reinvent production as well. Unboxed manufacturing, fewer parts and polymer body components with integrated color could reduce manufacturing complexity and potentially eliminate substantial portions of the traditional paint process.

Optimus shows that the strategy extends far beyond transportation. Tesla is replacing Model S and Model X production capacity at Fremont with humanoid robot production.

The Cybercab is, in one sense, a robot on wheels; Optimus is a robot on two legs. Both represent Musk’s bet on physical AI.

Tesla has been preparing for autonomous driving for more than a decade.

If it can finally solve the remaining technological and regulatory problems, its installed fleet, accumulated driving data, computing infrastructure, manufacturing expertise and years of development could give it a huge advantage and winning position in the autonomous era.

Last Thursday’s event may have been small and underwhelming, but the vehicle at its center represents one of the largest strategic bets Musk has ever made.

He is gradually removing Tesla’s safety net as a conventional automaker and betting its future on autonomous vehicles and humanoid robots.

If the bet fails, Tesla may remain primarily an electric vehicle manufacturer in a market where its competitive advantage is narrowing.

If it succeeds, Tesla at the end of this decade could be a fundamentally different company, producing millions of intelligent autonomous machines that operate in the physical world.

This is not simply a growth strategy. It is an existential strategy.

All In with No Plan B.

 And that is probably exactly the situation Musk wants to create at Tesla.

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