California: Tesla has announced it will discontinue production of its Model S sedan and Model X SUV, marking a significant strategic shift as the company pivots toward artificial intelligence and robotics.
The decision was confirmed by CEO Elon Musk during Tesla’s investor call on Wednesday, where he said the company plans to wind down Model S and Model X production by next quarter.
“It’s time to basically bring the Model S and X programs to an end,” Musk told investors, adding that the Fremont, California manufacturing facility currently producing the vehicles will be repurposed for the production of Tesla’s Optimus humanoid robot.
The move comes as Tesla grapples with slowing vehicle sales and declining automotive revenue. In its latest earnings report, the company described the past year as a transition away from a hardware-focused automaker toward becoming a “physical AI company.”
Tesla reported fourth-quarter earnings per share of $0.50, surpassing Wall Street expectations of $0.45. Revenue reached $24.9 billion, slightly above analyst forecasts.
Despite the earnings beat, Tesla’s automotive revenue declined 11 percent year over year in 2025. Vehicle deliveries in the fourth quarter also fell 16 percent, with weaker demand in Europe cited as a major factor behind the downturn.
Tesla shares briefly rose in after-hours trading following the earnings announcement, though investor sentiment remains cautious amid the company’s shifting business priorities.
Musk has increasingly positioned Tesla’s robotics and autonomous driving initiatives as key long-term growth drivers. He has previously described the Optimus robot as potentially the “biggest product of all time.”
Tesla plans to begin producing the humanoid robot before the end of 2026, with consumer sales expected to start in 2027.
