Tesla Chief Executive Elon Musk has spent years trying to build the automaker of the future. It’s the electric-car company of the present that’s now giving him trouble.

After a period of rapid expansion, the company has seen its sales fall and its once-enviable margins shrink. For the first time in years, the biggest question for Tesla is not whether it will be able to make enough cars, but whether people will buy them.

The company’s stock, down 34% this year, has been the worst performer in the S&P 500 index. While Tesla remains the world’s most valuable automaker by a wide margin, its market capitalisation has tumbled by more than half since it peaked in 2021.

Consumer appetite for electric vehicles is cooling. The core of Tesla’s lineup is dated. The company has been cutting prices to spur demand. Big, moonshot bets have not panned out as Musk predicted—at least not yet. And Chinese carmakers are now the ones that look like nimble, tech-savvy upstarts.

Musk’s attention, meanwhile, has sometimes been elsewhere. He bought Twitter, sold some Tesla stock along the way and started an artificial-intelligence company . Of late, he has been picking fights with everyone from OpenAI to Disney Chief Executive Bob Iger . Surveys suggest his public persona has alienated some would-be Tesla buyers.

This week, the company reported its first year-over-year decline in quarterly deliveries since 2020—a result that badly missed Wall Street’s expectations.

Musk’s company remains a formidable player in the electric-vehicle market globally and is the clear leader in the U.S. It is still making money on its vehicles, while many established car companies are struggling to turn a profit on their EVs, after committing tens of billions of dollars to expand their offerings. But the boom times of Tesla’s past have faded, and the bright future imagined by Musk—where people will ride around in fully autonomous Teslas—remains distant.

“Tesla is going from the golden era to a really challenging era,” said Mark Fields , a former CEO of Ford Motor who now serves on several corporate boards. Tesla and Musk didn’t respond to requests for comment.

Boom times

Three years ago, Tesla appeared all but unstoppable.

After years of financial uncertainty and production challenges, the company had turned a corner and was delivering quarter after quarter of record profit.

Its factories were humming , even as a global shortage of semiconductors led many rivals to curtail auto production. Consumer demand was strong enough that Tesla was hiking prices, and waiting lists for new vehicles grew long enough that some buyers were paying a premium for lightly used ones.

As automakers set about remaking themselves in Tesla’s image, Musk—a master salesman with an uncanny knack for inspiring investors to believe in his vision —sought to catch the next market wave: artificial intelligence.

At a Tesla recruiting event in the summer of 2021, the billionaire took the stage in Palo Alto, Calif., dressed all in black, as is his custom.

Tesla had for years been working to develop technology that would allow a computer to assume more of the driving tasks, rolling out the software as part of its Autopilot system.

In an attempt to emphasise Tesla’s might in the artificial-intelligence space—and ambitions beyond the competitive, traditionally low-margin automotive business—Musk unveiled the company’s latest effort: a friendly humanoid robot. The robot, Optimus, was not ready yet. In its place, a human dressed in a robot costume danced on stage.

“Tesla is much more than an electric-car company,” Musk told the crowd. “In the future, physical work will be a choice.”

In late October 2021, rental-car company Hertz Global Holdings said it was ordering 100,000 Tesla vehicles as it looked to expand its fleet of EVs. For investors, the deal was a sign that EVs were becoming mainstream—and soon more drivers would have an opportunity to try one.

Tesla’s market value eventually peaked above $1.2 trillion in early November, up more than 2,000% in two years.

The euphoria was short-lived.

Musk soon began unloading Tesla stock, embarking on a spree that continued for more than a year and resulted in his selling more than $39 billion in shares. The sales—executed in part to fund Musk’s eventual purchase of Twitter—spooked the market and weighed on Tesla’s stock.

‘Enough on our plate’

The surprises kept coming in 2022.

On a late-January earnings call, Musk revealed Tesla would not be introducing any new models that year, attributing the decision to supply-chain constraints. Instead, the company would churn out as many of its existing models as possible.

Tesla sold four models at the time, but just two drove the lion’s share of the company’s sales: the Model Y sport-utility vehicle and the Model 3 sedan.

Plans for a $25,000 car—a model Musk had teased in late 2020 and said likely would be ready in three years—had been put on ice.

“We have enough on our plate right now,” Musk said.

The move was risky. In the car business, new and redesigned models are critical to holding buyers’ interest and maintaining pricing power.

Analysts were perplexed. One questioned whether Tesla could hit its growth targets with fewer than a half-dozen passenger-vehicle models in its lineup.

Musk brushed off the concern. Instead, he alluded to his vision for a future where Teslas would be able to operate autonomously around the clock—making them even more valuable.

“It’s apparent from the questions that the gravity of Full Self-Driving is not fully appreciated,” Musk said, referring to a souped-up version of Tesla’s driver-assistance technology. (The system doesn’t currently make Tesla vehicles autonomous.)

As the year wore on, investors grew increasingly jittery. Musk’s pursuit of Twitter only amplified concerns on Wall Street that the Tesla CEO was not focused enough on his carmaker.

“Twitter is a distraction,” Gary Black, managing partner of the Future Fund, a Tesla investor, said at the time. “All of the space has been sucked up by him talking about Twitter, and so you don’t hear him tweeting about EVs.”

Warning signs flashed in China, where wait times for new Teslas fell to about a month as of September 2022, from four-plus months in the spring, according to Bernstein Research.

Tesla executives, including chief designer Franz von Holzhausen, pressed Musk to revive plans for the company’s more affordable, mass-market car, arguing it was necessary for Tesla to reach its growth targets, according to Walter Isaacson ’s biography of the CEO. Musk had been more interested in developing autonomous cars that could operate in a robotaxi fleet.

“Our responsibility is to try to get as many people into an EV as possible,” von Holzhausen told The Wall Street Journal earlier this year.

And while he is optimistic about the promise of self-driving cars and encouraged by Tesla’s recent progress, von Holzhausen said the transition will not be simple.

“Maybe I’m more pragmatic about it, but I think autonomy is…it’s going to be a challenge,” he said. “It’s still sci-fi to a lot of people.”

In late October, Tesla cut prices in China by an average of around 7%, according to Bernstein.

Soon after, it began offering temporary discounts on its most popular models in the U.S.—by $3,750 at first, then $7,500 plus 10,000 miles of free fast-charging if customers took delivery before year-end.

Tesla’s 2022 ended on a downbeat note. Its annual vehicle deliveries—up 40% over the prior year— fell short of the company’s initial goal and underperformed Wall Street’s expectations. The stock suffered its worst annual performance on record, declining 65%.

By early January 2023, it became clear within Tesla’s finance department that the company needed to take more aggressive action to move cars, people familiar with the matter said.

Tesla had opened two new factories in 2022—one in Germany and another in Texas—expanding its production capacity roughly 80% in less than a year. Unsold inventory climbed to 13 days’ worth of supply in the final three months of 2022, from just four days in the second quarter, according to Tesla’s financial disclosures.

As January unfolded, orders weren’t keeping pace with internal forecasts, one of the people said.

Employees developed a plan that called for Tesla to cut prices more permanently, an unusual strategy in an industry where companies typically try to be more discreet with their incentives.

Deep price cuts

Elsewhere in the auto industry, Tesla’s rivals were unleashing a barrage of new EV models, including ones designed to directly compete with the Model Y and Model 3.

On a Thursday night in January 2023, Tesla quietly updated its website, slashing prices across its lineup, in some cases by nearly 20%.

Tesla made cuts that were even deeper than the finance department had initially proposed, the people familiar with the matter said.

For Musk, it was a calculated gamble. Tesla’s double-digit operating margins meant it could better absorb the price cuts than rivals, and the move would also put the squeeze on competitors—many of which were losing money on their EVs.

Across the Atlantic, Vincent Cobée, then-CEO of Stellantis ’s Citroën brand, was at the Brussels Motor Show when a journalist told him about Tesla’s price cuts.

Cobée’s first thought: “He’s completely nuts.”

Then: “We’re in deep trouble,” he recalled later.

The maneouvre did boost sales at Tesla—for a time. The company’s vehicle prices fell by an average of 12% globally in the first half of 2023, and deliveries rose 19% compared with the prior six months, according to Wells Fargo.

But in the second half of 2023, as Tesla continued to lower prices and layer on incentives, the company’s vehicle-delivery growth slowed to 3%, compared with the first half—a figure that Wells Fargo analysts described as “concerningly low.”

Some in the auto industry were also starting to sour on electric vehicles.

Dealers who once were bullish about the technology began worrying about the cars stacking up on their lots. Companies that had been racing to scale up EV production suddenly began delaying their investments and shifting their attention to hybrids, which were selling well.

For Tesla, the only new model on the horizon was the Cybertruck—a long-delayed and difficult-to-manufacture pickup truck that eventually hit the market in November . Even so, the model is only available in North America, and Musk has warned it is unlikely to generate significant cash flow before the end of this year.

In China, the world’s largest car market and a production hub for Tesla, a price war had already broken out. The country’s leading EV maker, BYD, and other Chinese car manufacturers were mounting their own offensive, rapidly releasing more affordable EVs that were winning over the domestic market and beginning to make inroads overseas.

In January of this year, Hertz delivered another blow, saying it was selling about a third of its global EV fleet —much of it made up of Tesla vehicles. The rental-car company had previously flagged problems with fast-falling EV resale values and pricey repairs.

Drop in deliveries

Then came the news from earlier this week: Tesla delivered 386,810 vehicles globally in the first three months of 2024, down 8.5% from a year earlier . It was the company’s lowest quarterly performance since the third quarter of 2022.

Wall Street analysts had slashed their expectations for Tesla’s first-quarter performance in the weeks before the disclosure on Tuesday, but the company still came up short.

Musk has sought to quell concerns by describing the company as being in between two growth waves—the first driven by the Model 3 and Model Y, the second to be propelled by the company’s next generation of vehicles, including the much-anticipated low-cost car , which he said in January is due to enter production in late 2025.

In recent weeks, employees were told to prioritise development of a robotaxi, according to a person familiar with the matter.

Reuters on Friday reported that Tesla had canceled plans for the inexpensive car. Musk denied the report on X, as Twitter is now known. Hours later, he added that Tesla plans to unveil its robotaxi model in August.

As Musk has used his social-media platform to address polarising topics such as immigration and race, there is evidence that Musk is doing Tesla no favors with his extracurricular activities.

The company’s reputation among potential U.S. buyers has taken a hit since Musk acquired Twitter, according to market-intelligence firm Caliber. The automaker’s “consideration” rate—where survey respondents said whether they are very likely to buy, or continue buying, products from Tesla—fell from 46% to 35% between September 2022 and this March, Caliber said.

As Tesla’s profitability has weakened, Musk has talked up the potential of the company’s autonomous-driving strategy.

“Most people still have no idea how crushingly good Tesla FSD will get,” he posted on X in late March. “Cars will take you where you want automatically, just like getting in an elevator and pressing a button, something that also used to be manual.”

Despite the recent stock decline, Tesla’s valuation—$525 billion at Friday’s close—still towers over those of other automakers.

Many investors remain confident that Musk, who has defied the odds many times before, can deliver on this vision. Some, such as Owuraka Koney, a managing director at investment manager Jennison Associates, are betting Tesla will be able to generate ample revenue by selling downloadable software, such as its driver-assistance technology, long after it makes that initial car sale.

Said Koney: “We remain very bullish over the long-term.”

— Ryan Felton, Tim Higgins, Mike Colias and Sean McLain contributed to this article.

When Peter Cox wrapped up his career as a paediatric critical-care doctor at age 65, he celebrated by signing up for the Tour d’ Afrique, a transcontinental bike trip with TDA Global Cycling. The roughly 5,600-mile route from Cairo to Cape Town spans 10 countries over 74 days of riding with just 28 rest days. Riders average 74 miles a day and spend only 10 nights in hotels. They camp the rest of the journey.

Cox wasn’t the oldest participant. The group had five riders over 70.

Outfitters specialising in adventure travel say the average age of their customers has ticked upward since Covid, according to a survey by travel research company Skift. At TDA, for example, the average client age currently is 62, compared with 57 pre pandemic. And some 6% of its clients last year were over 75; before the pandemic, the percentage never exceeded 1%, the company says.

Adventure South NZ, a New Zealand-based outfitter, says the average age of its hiking and biking guests was 55 during the 10 years before the pandemic. It jumped to 65 directly after.

A U.S.-based operator focusing on trips for women, Adventures in Good Company, says its average guest age rose to 62 in 2023, compared with 58 pre pandemic, and on many of its most-challenging trips, ages skewed even higher. Last year a 73-year-old completed a nine-day slackpacking trip along the Appalachian Trail in Georgia that averaged 7 to 16 miles a day, and an 80-year-old woman completed a nine-day trekking tour of Mont Blanc in France.

About 4.1 million Americans will reach 65 years old this year . “Sixty is the new 40,” says Shannon Stowell , president of the Adventure Travel Trade Association. “My dad stopped being active at 50.… People are living longer, healthier lives and are more active than ever.”

Intensity with comfort

Adventure travel doesn’t have to be as intense as it once was. Stowell says it has gained popularity with an older demographic in part because there are more comforts available, such as lodges with good food and guides who will transfer your gear. “Trekking to Machu Picchu or Everest Base Camp used to be so much more hard-core,” he says. “Better gear and more professionalism in guiding have made these adventures more accessible.”

Also, clients in the 55-plus crowd have traveled more than their parents and grandparents did, Stowell says. “They’ve done Rome and Paris. Now they want to go deeper to places like Mongolia,” he says.

Cox, who is now 70 and lives in Toronto, rode 2,547 miles from Bangkok to Ho Chi Minh City last year. This spring, his wife, 60, will join him on a 35-day, 1,637-mile bike expedition in Morocco. And in 2025, he plans to pedal 3,295 miles in the Himalayas from Srinagar, India, to Kathmandu, Nepal.

“I’ve never been on a cruise or to an all-inclusive resort,” he says. “The nice part of cycling is you’re moving at a speed that allows you to interact physically and emotionally with the environment.”

On long rides, Cox experiences discomfort in his shoulders and hips, but he says regular stretching has kept most aches at bay.

Rita Tellerman of New York City celebrated her 70th birthday in 2019 by cycling 1,885 miles through Madagascar with TDA Global Cycling. The trip featured 31 days of riding, nine rest days and a mix of hotel stays and camping.

“It ticked all of the areas that took me out of my comfort zone,” she says. “It was my first trip to a Third World country. I had no clue about camping equipment. And I’d never ridden a gravel bike.” The retired public-health nutritionist started cycling at age 50 and says her speed isn’t what it once was. “It pisses me off when I can’t keep up with the 50-and 60-year-olds,” she says.

Time and money

Such trips require significant time and money, two assets that many older people tend to have at their disposal. Monika Sundem , chief executive of trip planner Adventure Life, says her company’s trips, which average eight to 10 days, cost $600 to $800 a day per person. Her customers in the post-65 range, meanwhile, have gone from 23.5% in 2019 to 35% last year, and they are booking such trips as treks in Patagonia, mountain biking in Ecuador and climbing in the Alaskan backcountry.

Todd Rutledge , owner of expedition specialist Mountain Trip, says 60-plus customers make up 19% of clients on his Alaska Range itineraries. “A lot of people tell us they didn’t want to go away when their kids were at home,” he says.

“Our trips are a hefty investment,” says Rutledge, whose multi-week to two-months-long expeditions typically cost $10,000 to $60,000. Most require a high level of fitness, too. “People age 65 and older statistically are more likely to experience some form of altitude sickness,” he says. “We’re not physiologists or trainers so in 2018 we partnered with a company to design personalised training programs for guests—and most, particularly our older guests, take advantage.”

Deb Shucka, 72, of Battle Ground, Wash., walks and hikes regularly to maintain her fitness for hiking vacations. She celebrated her 70th birthday trekking el Camino de Costa Rica, a roughly 175-mile cross-country trail with a peak elevation of more than 7,600 feet.

“At one point our guide told us, ‘Every morning starts with breakfast and a hill,’ and he wasn’t joking,” she says. “I had to stop a bunch on the hills but I never felt impaired,” she says. Guides transferred bags, which she says made the 16-day trip more appealing. Along the way she slept in tents, cabins and on the floor of a village community centre.

Last year, Shucka completed the Cape Camino, a roughly 400-mile route in South Africa, and she is hoping to trek in Ireland this fall. “When I retired at 63 it dawned on me I have to do these things now even if my husband doesn’t love to travel,” she says. “I’ve fallen in love with travelling by myself .”

Surf’s up

Betsy Cuthberton, 65, an accountant in Vail, Colo., and her retired husband, Mike Cuthberton, 66, recently took a vacation in Costa Rica so they could learn to surf. “We aren’t sit-on-the-beach people,” the wife says. “We do TRX classes and yoga a few times a week so we’re still physically capable of trying anything.” The couple, who are devoted skiers, booked a weeklong stay with Surf Synergy, a surf camp in Jaco that incorporates training, yoga and massages into the programming.

Surf Synergy co-founder Marcel Oliveira says he has seen an uptick in 65-plus guests wanting to surf for the first time. He assigns each guest two coaches so they always have someone with them in the water, whether taking off on a wave or getting out of the water. Betsy Cuthberton stood up on her first wave, and her husband was up and riding by the end of the first day.

“Not once did anyone say, ‘You’re too old,’ ” she says. “I believe staying young is embracing a mindset where you’re always learning.”

At the Wharton School this spring, Prof. Ethan Mollick assigned students the task of automating away part of their jobs.

Mollick tells his students at the University of Pennsylvania to expect to feel insecure about their own capabilities once they understand what artificial intelligence can do.

“You haven’t used AI until you’ve had an existential crisis,” he said. “You need three sleepless nights.”

Top business schools are pushing M.B.A. candidates and undergraduates to use artificial intelligence as a second brain. Students are eager for the instruction as employers increasingly hire talent with AI skills .

American University’s Kogod School of Business is putting an unusually high emphasis on AI, threading teaching on the technology through 20 new or adapted classes, from forensic accounting to marketing, which will roll out next school year. Professors this week started training on how to use and teach AI tools.

Understanding and using AI is now a foundational concept, much like learning to write or reason, said David Marchick, dean of Kogod.

“Every young person needs to know how to use AI in whatever they do,” he said of the decision to embed AI instruction into every part of the business school’s undergraduate core curriculum.

Marchick, who uses ChatGPT to prep presentations to alumni and professors, ordered a review of Kogod’s coursework in December after Brett Wilson, a venture capitalist with Swift Ventures, visited campus and told students that they wouldn’t lose jobs to AI, but rather to professionals who are more skilled in deploying it.

American’s new AI classwork will include text mining, predictive analytics and using ChatGPT to prepare for negotiations, whether navigating workplace conflict or advocating for a promotion. New courses include one on AI in human-resource management and a new business and entertainment class focused on AI, a core issue of last year’s Hollywood writers strike.

Officials and faculty at Columbia Business School and Duke University’s Fuqua School of Business say fluency in AI will be key to graduates’ success in the corporate world, allowing them to climb the ranks of management. Forty percent of prospective business-school students surveyed by the Graduate Management Admission Council said learning AI is essential to a graduate business degree—a jump from 29% in 2022.

Many of them are also anxious that their jobs could be replaced by generative AI. Much of entry-level work could be automated, the management-consulting group Oliver Wyman projected in a recent report. That means that future early-career jobs might require a more muscular skillset and more closely resemble first-level management roles .

Faster thinking

Business-school professors are now encouraging students to use generative AI as a tool, akin to a calculator for doing math.

M.B.A.s should be using AI to generate ideas quickly and comprehensively, according to Sheena Iyengar, a Columbia Business School professor who wrote “Think Bigger,” a book on innovation. But it’s still up to people to make good decisions and ask the technology the right questions.

“You still have to direct it, otherwise it will give you crap,” she said. “You cannot eliminate human judgment.”

One exercise that Iyengar walks her students through is using AI to generate business idea pitches from the automated perspectives of Tom Brady, Martha Stewart and Barack Obama. The assignment illustrates how ideas can be reframed for different audiences and based on different points of view.

Blake Bergeron, a 27-year-old M.B.A. student at Columbia, used generative AI to brainstorm new business ideas for a project last fall. One it returned was a travel service that recommends destinations based on a person’s social networks, pulling data from their friends’ posts. Bergeron’s team asked the AI to pressure-test the idea, coming up with pros and cons, and for potential business models.

Bergeron said he noticed pitfalls as he experimented. When his team asked the generative AI tool for ways to market the travel service, it spit out a group of very similar ideas. From there, Bergeron said, the students had to coax the tool to get creative, asking for one out-of-the-box idea at a time.

Professors say that through this instruction, they hope students learn where AI is currently weak. Mathematics and citations are two areas where mistakes abound. At Kogod this week, executives who were training professors in AI stressed that adopters of the technology needed to do a human review and edit all AI-generated content, including analysis, before sharing the materials.

Faster doing

When Robert Bray, who teaches operations management at Northwestern’s Kellogg School of Management, realised that ChatGPT could answer nearly every question in the textbook he uses for his data analytics course, he updated the syllabus. Last year, he started to focus on teaching coding using large-language models, which are trained on vast amounts of data to generate text and code. Enrolment jumped to 55 from 21 M.B.A. students, he said.

Before, engineers had an edge against business graduates because of their technical expertise, but now M.B.A.s can use AI to compete in that zone, Bray said.

He encourages his students to offload as much work as possible to AI, treating it like “a really proficient intern.”

Ben Morton, one of Bray’s students, is bullish on AI but knows he needs to be able to work without it. He did some coding with ChatGPT for class and wondered: If ChatGPT were down for a week, could he still get work done?

Learning to code with the help of generative AI sped up his development.

“I know so much more about programming than I did six months ago,” said Morton, 27. “Everyone’s capabilities are exponentially increasing.”

Several professors said they can teach more material with AI’s assistance. One said that because AI could solve his lab assignments, he no longer needed much of the class time for those activities. With the extra hours he has students present to their peers on AI innovations. Campus is where students should think through how to use AI responsibly, said Bill Boulding , dean of Duke’s Fuqua School.

“How do we embrace it? That is the right way to approach this—we can’t stop this,” he said. “It has eaten our world. It will eat everyone else’s world.”