Elon Musk has announced that Tesla is preparing to effectively end production of its flagship Model S and Model X electric vehicles beginning next quarter.
Speaking during the company's 2025 earnings call, Musk said the move will mean Tesla's accelerating shift toward an autonomous, AI-driven future.
Once the current inventory is sold, the vehicles will not return to production, though the EV maker will continue to support existing owners.
Instead, Tesla plans to repurpose space at its Fremont factory to manufacture its Optimus humanoid robots.
Declining Sales Underscore Strategic Pivot
The Model S and Model X once defined Tesla's rise. The Model S launched in 2012 as a breakthrough luxury EV, followed by the Model X SUV in 2015. But demand has steadily eroded as Tesla's focus and consumer preference shifted to newer, more affordable models.
In 2025, Tesla delivered over 1.58 million Model 3 and Model Y vehicles, compared to just 418,000 Model S and Model X units combined. International headwinds compounded the decline, particularly after Tesla halted Model S and X sales in China due to import tariffs, cutting off a major premium market.
The numbers make the decision difficult emotionally, but logical strategically.
Optimus Robots Move to the Forefront
According to Engadget, Musk revealed that Tesla aims to produce up to one million Optimus robots using the former Model S and X production lines. He has also stated that Tesla plans to begin selling Optimus robots to consumers by the end of next year, dramatically expanding the company's scope beyond transportation.
Musk has repeatedly described Optimus as potentially the biggest product ever created, though public demonstrations so far have yet to fully validate those claims. Still, Tesla's manufacturing-scale ambitions suggest the company is betting heavily on robotics as its next growth engine.
AI Investments Continue to Be Concerning
Tesla's earnings report also disclosed a $2 billion investment in Musk's AI startup, xAI, a move that reignited concerns among shareholders about conflicts of interest. Those concerns are not new: Musk previously faced lawsuits over governance and capital allocation issues tied to his multiple ventures.
Despite the controversy, investors approved Musk's massive compensation package in late 2025, contingent on Tesla achieving an $8.5 trillion valuation, a target that would require Tesla to succeed far beyond traditional auto manufacturing.
Tesla shouldn't hold back if they want to go all-in on humanoid robots. The adjustments will be more difficult this time as AI robots tend to be hyped over time.
Originally published on Tech Times
