Musk discontinues Tesla Model S and X to focus on humanoid robots
Tesla’s car business is losing momentum. With falling revenues, the company now wants to transform into an AI company
Tesla is preparing to retire its longest-running premium electric cars as Elon Musk accelerates a shift towards robotics and artificial intelligence.
During a fourth-quarter earnings call this week, the chief executive told investors that production of the Model S sedan and Model X SUV would come to an end next quarter.
The decision closes a chapter that began more than a decade ago, when the Model S helped establish Tesla as a serious force in the US car market. The Model X followed soon after, positioned as a high-end family SUV with distinctive Falcon-wing doors.
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The move was announced alongside earnings that revealed falling car sales but stronger-than-expected profits. Tesla reported earnings per share of $0.50, beating Wall Street forecasts of $0.45.
Revenue reached $24.9 billion for the final quarter of 2025, slightly above expectations, even as total revenue fell 3% year on year. Automotive revenue declined 11%, and deliveries dropped 16%, with Europe showing the sharpest weakness.
Musk said the Fremont factory in California, which currently builds the Model S and X, will be converted to produce the Optimus humanoid robot. The site has been central to Tesla's US manufacturing for years. Now the long-term target is to produce one million robots a year at the facility.
Tesla now describes itself as moving from a hardware-focused carmaker to a physical artificial intelligence company. Alongside Optimus, it is investing in autonomous Robotaxis and related systems. The company plans to begin producing Optimus before the end of 2026, with sales to the public potentially starting in 2027.
