Tesla drops 7% on self-driving competition, Musk OpenAI distractions

Tesla shares dropped 6% on Tuesday after Chinese rival BYD announced plans to develop autonomous vehicle technology with DeepSeek, and said it will offer its Autopilot-like system in nearly all of its latest cars, adding to fears that Elon Musk’s company is falling behind the competition.

There’s also growing concerns surrounding Musk’s distractions outside of Tesla, after news surfaced that the world’s richest person is offering to steer an investor group in purchasing OpenAI, while he steps up his work with President Donald Trump’s White House.

Tesla’s stock price has slid for five straight days, falling near 17% over that stretch to $328.50, and wiping out over $200 billion in market cap.

BYD, which has emerged as Tesla’s fiercest rival on the world stage, said on Monday that at the very least 21 of its latest model vehicles will come equipped with its partially automated driving systems that include features for automatic parking and navigating on highways.

Tesla doesn’t yet offer a robotaxi and its EVs currently require a human driver to stay on the wheel, able to steer or brake at any time. On Tesla’s earnings call last month, Musk said the corporate is aiming to launch “Unsupervised Full Self-Driving,” and a driverless rideshare service in Austin, Texas, in June. Alphabet’s Waymo already operates a robotaxi service in Austin in addition to in parts of Phoenix, San Francisco.

“In our view, competition between Waymo, Tesla and a number of Chinese players is a key driver on the trail to commercialization” of robotaxis,” Morgan Stanley analysts wrote in a note to clients after the BYD announcement. The firm recommends buying the stock and has a price goal of $430.

Waymo said on Tuesday that it added 10 square miles of coverage to its robotaxi service in Los Angeles.

In a report on Tuesday, Oppenheimer analysts wrote that the “autonomy competition may limit [Tesla] profitability.” Even when Tesla meets its June 2025 timeline for driverless cars in Texas, the corporate is “one among several autonomous technology providers, suggesting competition on price and performance,” they wrote.

Along with running Tesla, Musk is CEO of SpaceX, owns social media company X and is head of artificial intelligence startup xAI. He’s also spending significant time lately in Washington, D.C., running the “Department of Government Efficiency” (DOGE) as a special government worker, aiming to slash federal spending, personnel, regulations and even entire agencies.

Investors already concerned about Musk’s hefty commitments beyond his trillion-dollar EV company have more reason for trepidation after events that unfolded on Monday. Musk’s attorney, Marc Toberoff, confirmed to CNBC that Musk was leading a consortium of investors in a $97.4 billion bid for OpenAI.

Musk was among the many founders of OpenAI in 2015, when the AI startup was created as a nonprofit research lab. Musk sought to have Tesla acquire OpenAI, and he later departed the organization’s board.

OpenAI has since commercialized quite a few products, most notably ChatGPT. Co-founder and CEO Sam Altman is in search of to restructure OpenAI as a for-profit entity. Musk has sued OpenAI to forestall that transition, and commenced xAI as a direct competitor.

The Oppenheimer analysts wrote that, “While [Tesla] has shifted focus to being a Physical AI play, we view Elon Musk’s bid for Open AI as a distraction from [Tesla’s] challenges.”

Altman told employees in a memo on Tuesday that OpenAI’s board hasn’t received an official offer from Musk and reminded staffers that “Elon has a history of creating claims that do not delay.”