Tesla’s dominance in the U.S. electric vehicle (EV) market has slipped to new lows, with Cox Automotive reporting that the carmaker accounted for just 38% of total EV sales in August.

It is the first time since October 2017 that Tesla’s share has fallen under 40%, underscoring the challenges facing Elon Musk’s company in a maturing and increasingly competitive market.

Cox Automotive and Tesla declined to comment when contacted, but the figures represent a striking decline from Tesla’s peak, when it controlled more than 80% of the U.S. EV market.

The decline comes against the backdrop of Tesla’s latest earnings report, which missed expectations on both vehicle deliveries and revenue. The company posted its steepest year-over-year revenue decline in the past decade, attributing the downturn to a “sustained uncertain macroeconomic environment” shaped by shifting tariffs, unclear fiscal policy impacts, and volatile political sentiment.

Musk has warned that Tesla may face “a few rough quarters,” especially as the federal EV tax credit expires at the end of September. Nonetheless, he maintains that Tesla’s financials will look “very compelling” by late 2026. In a May interview, when pressed on reversing the slump, Musk insisted the turnaround had “already” begun.

Leadership Turbulence

Internally, Tesla has experienced significant shakeups. Musk has taken direct control of U.S. and European sales after the departure of his deputy, Omead Afshar, Bloomberg reported. The Wall Street Journal added that Tesla’s top North America sales executive also left the company in July.

Meanwhile, Musk has been repositioning Tesla beyond its core car business. The company recently unveiled its fourth “Master Plan,” in which Musk suggested that as much as 80% of Tesla’s long-term value could stem from its humanoid robot Optimus rather than vehicles.

“Tesla is positioning itself as a robotics and AI company,” said Stephanie Valdez Streaty, Cox’s director of industry insights. “But when you’re a car company, when you don’t have new products, your share will start to decline.”

Shareholder Confidence in Musk

Despite the turbulence, Tesla’s shareholders continue to show faith in Musk’s leadership. On Friday, Tesla’s board announced an unprecedented $1 trillion compensation package designed to secure his stewardship as the company reinvents itself as both an AI and robotics powerhouse. The move highlights investor confidence that Musk remains central to Tesla’s long-term strategy, even as short-term performance falters.

The EV landscape has shifted dramatically. U.S. rivals Ford, General Motors, Hyundai, and Kia are aggressively expanding their EV offerings at competitive price points. Globally, Tesla has also ceded ground to Chinese giant BYD, which has surged ahead on the back of government support and a wider product portfolio.

Tesla, in turn, is working on a cheaper vehicle that could boost sales momentum after the $7,500 U.S. federal tax credit expires this month. For now, however, its relatively narrow lineup leaves it exposed as competitors flood the market with more choices.

Tesla’s U.S. slip mirrors broader global trends. In Europe, Volkswagen and Stellantis have steadily chipped away at Tesla’s share, while in China, BYD has pulled ahead decisively. The August figures show that Tesla’s stronghold in the U.S. is no longer immune to the same pressures reshaping global EV markets.

Looking to 2026: Best- and Worst-Case Scenarios

As Tesla charts its course into 2026, analysts have painted two divergent:

Best-Case Scenario

Tesla successfully launches its cheaper mass-market EV in time to capture buyers priced out of its current lineup. This allows the company to recover U.S. market share while maintaining profitability. Simultaneously, Optimus — Musk’s humanoid robot — gains traction in commercial and industrial markets, proving Tesla’s pivot to AI and robotics is more than aspirational.

By late 2026, the dual strength of a revitalized car lineup and a fast-growing robotics division could deliver on Musk’s promise of “very compelling” financials. Shareholders who backed his $1 trillion package would be vindicated.

Worst-Case Scenario

Tesla delays or struggles to deliver the affordable EV, leaving it vulnerable to rivals that flood the market with competitive models. Without new products, U.S. market share continues to slide below 30% as buyers migrate to competitors. Meanwhile, Optimus remains in the prototype stage with little commercial application, casting doubt on Musk’s claim that it will represent 80% of Tesla’s value.

By 2026, Tesla risks being seen as overstretched — too distracted by robotics and AI ambitions to defend its car business, the foundation of its brand.

For months, Google has stood firm on its message that the web is healthy, AI tools aren’t draining clicks, and its search engine is funneling people to a wider variety of websites than ever before.

However, a recent court filing revealed a strikingly different narrative.

In a filing submitted last week, ahead of a trial over its dominance in the advertising technology market, Google acknowledged that “the open web is already in rapid decline.” The admission, spotted by analyst Jason Kint and reported by Search Engine Roundtable, marks a sharp departure from the company’s upbeat public narrative.

The disclosure is part of Google’s strategy to defend itself against the U.S. Department of Justice (DOJ), which has recommended breaking up the company’s ad tech business. Google argues that such a divestiture would not revive competition but instead “accelerate” the collapse of the open web, harming publishers reliant on open-web display advertising.

Google’s Filing

“Finally, while Plaintiffs continue to advance essentially the same divestiture remedies they noticed in their complaint filed in January 2023, the world has continued to turn,” Google wrote in the filing.

The company added that the DOJ is acting as if the “incredibly dynamic ad tech ecosystem had stood still” while judicial proceedings dragged on.

According to Google, ad tech is undergoing seismic changes: AI is reshaping the industry, and advertisers are shifting rapidly toward formats outside the open web, such as Connected TV and retail media.

“The fact is that today, the open web is already in rapid decline and Plaintiffs’ divestiture proposal would only accelerate that decline, harming publishers who currently rely on open-web display advertising revenue,” the filing read.

Public Narrative vs. Courtroom Reality

The admission stands in stark contrast to Google’s recent public defense of its search product. As AI-powered tools such as ChatGPT and Perplexity gain popularity and Google itself rolls out AI-powered search overviews, many publishers and independent site owners have reported declining traffic. Yet, Google executives have consistently countered that the web is “thriving.”

In May, CEO Sundar Pichai told Decoder that Google was “definitely sending traffic to a wider range of sources and publishers” with its new AI search features. Nick Fox, Google’s senior vice president of knowledge, echoed that defense in June on the AI Inside podcast, insisting “the web is thriving.” Search chief Liz Reid cited Pew Research data to argue that while user behavior is changing, click volume remains “relatively stable” year-on-year.

After the courtroom filing surfaced, Google sought to downplay the remarks. Company spokesperson Jackie Berté told The Verge the “decline” line was being misrepresented, emphasizing that the context referred to “open-web display advertising,” not the open web as a whole.

“We are pointing out the obvious: that investments in non-open web display advertising like connected TV and retail media are growing at the expense of those in open web display advertising,” Berté said.

Still, the dissonance between Google’s courtroom arguments and its public messaging highlights the shifting reality of the digital economy. Publishers—already struggling with reduced referral traffic and tighter advertising margins—see the rise of AI-driven answers as an existential threat, one Google seems reluctant to acknowledge outside a courtroom.

Some analysts note that Google’s acknowledgement, even if framed around advertising rather than search, reinforces the mounting challenges faced by newsrooms and independent sites. With advertising dollars flowing toward walled gardens such as Amazon’s retail media network, YouTube, and streaming platforms, the open web’s share of digital ad spending continues to shrink.

As the DOJ trial continues, Google’s lucrative ad tech business faces an existential challenge – that could redefine how digital advertising operates. For publishers caught in the middle, the fight is not just about competition—it’s about survival.

Artificial intelligence startup Cognition has cemented its place among the industry’s elite, announcing on Monday that it closed a $400 million funding round at a $10.2 billion valuation — a milestone that includes the newly raised capital.

The funding, led by Peter Thiel’s Founders Fund with participation from Lux Capital, 8VC, and Bain Capital Ventures, underscores the appetite among investors for high-growth AI companies despite growing concerns over saturation in the sector.

Cognition is best known as the developer of Devin, an AI software engineer designed to automate and accelerate coding tasks. The company vaulted into the spotlight in July when it acquired Windsurf, a rival startup that had recently been rocked by leadership departures. That bold move has since redefined Cognition’s trajectory.

Windsurf’s turbulent path

Windsurf had been in advanced talks with OpenAI for a multibillion-dollar acquisition earlier this year, but the negotiations collapsed. Soon after, its founders and top researchers defected to Google, in a deal that included a $2.4 billion payout from the search giant in licensing fees and compensation.

In the aftermath, Cognition swooped in to acquire Windsurf, a move that surprised many in Silicon Valley given the sudden shifts in its leadership. The acquisition has already delivered measurable gains. According to CEO Scott Wu, Cognition’s annual recurring revenue (ARR) has more than doubled since the deal closed, with the combined enterprise ARR growing more than 30 percent in just two months.

“We’ll continue to invest significantly in both Devin and Windsurf, and our customers are already seeing how powerful the combination is together,” Wu wrote in a blog post announcing the funding.

The integration has been aided by Jeff Wang, who stepped in as CEO of Windsurf following the founders’ exit. In a LinkedIn post on Monday, Wang reassured customers that the tighter alignment between Windsurf and Cognition products would unlock new synergies: “It’s been quite an eventful last few months, and now it’s time to show what we’re made of.”

The $10 billion club

Cognition’s fresh valuation puts it in rare company, joining the likes of OpenAI and Anthropic, which have already established themselves as industry leaders. It also follows last week’s news that Sierra, the AI startup founded by former Salesforce co-CEO Bret Taylor, raised $350 million at a $10 billion valuation.

The flurry of billion-dollar valuations illustrates how quickly capital is flowing into the AI sector, but also highlights the mounting competition among startups trying to carve out space in a market dominated by Big Tech players such as Microsoft, Google, and Amazon.

For investors like Thiel’s Founders Fund, Cognition’s trajectory offers a chance to back an AI player that is both product-focused (through Devin) and strategically opportunistic (through the Windsurf acquisition). By comparison, OpenAI has leaned heavily on its partnership with Microsoft, while Anthropic has built its war chest through backing from Amazon and Google. Cognition’s independent path — combining product innovation with aggressive M&A — could set it apart in the long run.

The big question is whether Cognition can sustain its growth at scale. While ARR expansion has been promising, the company will need to prove that its combined suite of AI engineering and development tools can achieve widespread enterprise adoption. If successful, Cognition could emerge as one of the few independent challengers capable of standing alongside the most well-funded players in the industry.