Tesla Halts Production of Model S and X to Focus on Robots

Tesla Halts Production of Model S and X to Invest in Robots

Tesla announced that it will "basically stop production" of the Model S and Model X starting next quarter. CEO Elon Musk made the announcement during a financial results conference call for the fiscal year 2025. According to Musk, "it's time to close the Model S and X program with a proper farewell, as we are truly moving towards a future based on autonomy."

Despite the halt in production, the vehicles will still be available until stock runs out, and the company assured that it will support these models as long as there are customers. After sales end, Tesla will convert the production space of the Fremont factory for the manufacturing of humanoid robots called Optimus.

The Model S, introduced in 2012, and the Model X, launched in 2015, no longer have the same market appeal. In 2025, Tesla delivered 1,585,279 Model 3 and Y vehicles, compared to only 418,227 units of the S and X models. Additionally, the company halted sales of these models in China in mid-2025 due to tariffs that affected the importation of vehicles into the country.

During the call, Musk emphasized that Tesla's long-term goal is to produce 1 million Optimus robots in the space currently dedicated to the S and X models. At the World Economic Forum in Davos, he announced that the company will start selling the Optimus to the public by the end of 2026. Musk believes that the robot could become "the greatest product of all time," even surpassing smartphones, stressing, however, that the robot's performance has faced challenges in practical demonstrations.

Additionally, Tesla's earnings report revealed a $2 billion investment in xAI, another Musk venture. In 2024, Tesla shareholders sued Musk for starting xAI, arguing that it directly competes with the automaker that, according to the CEO, is more of an artificial intelligence (AI) company than just an electric vehicle manufacturer. Despite the controversies, shareholders approved a $1 trillion compensation package for Musk in 2025, conditioned on increasing the company's market value to $8.5 trillion.

Future Implications

Tesla's transition from producing electric sports vehicles to humanoid robots suggests a new strategic direction that could impact the automotive and technology sectors. With this change, the company may explore new opportunities in automation and AI, reflecting market trends towards the adoption of advanced technologies. The success of the Optimus robots could redefine the future of robotics and Tesla's relationship with its consumers.