Tesla Ends Production Of Models S & X, Focuses On Autonomous Cars, Optimus

Elon Musk confirmed Tesla will end production of the Model S and Model X in the second quarter of 2026, marking the conclusion of two of the company’s longest-running vehicles. The decision, announced during Tesla’s Q4 2025 earnings call on Wednesday, is part of a strategic pivot toward autonomous technology and robotics.

The Tesla CEO described the move as an “honorable discharge” for the models, which helped establish Tesla as a leader in the electric vehicle (EV) market since their launches in 2012 (Model S) and 2015 (Model X).

The Model S and Model X once served as Tesla’s flagship vehicles and were instrumental in early EV adoption in the U.S. and globally.

Production of these models has already been phased out in China and Europe since early 2025, with U.S. orders now being the final opportunity to purchase them.

With this move the company will focus on Models 3 and Y and which has been the company's best selling cars, and the Roadstar which Musk said will be unveiled in April.

Musk announced that the the Fremont, California factory will be retooled to mass-produce Optimus humanoid robots, with a long-term goal of 1 million units per year. Tesla is advancing its Cybercab robotaxi, set to begin production in April 2026. It will be a fully autonomous, two-seater vehicle with no steering wheel or pedals, designed to power a future robotaxi network.

Tesla plans to invest over $20 billion in capital expenditures in 2026, including a new “TerraFab” chip facility to produce AI chips domestically and expand production across energy storage, robotics, and battery manufacturing. The company also announced a $2 billion investment in xAI, Musk’s artificial intelligence company, reinforcing its broader AI ambitions.

Musk emphasized that Tesla is transitioning from a hardware-centric automaker to a “physical AI company”, integrating AI into robotics, energy systems, and autonomous transport.

The Optimus robot is entering its third generation, which Musk described as the first design meant for mass production. The robot currently performs basic factory tasks but is still in development.

Musk reiterated that Tesla’s future lies in autonomous driving, robotaxis, and humanoid robots, with the potential to significantly impact the U.S. economy and daily life. He expressed confidence in achieving “amazing abundance” through these technologies.

Tesla reported its first-ever annual revenue decline, down 3% to $94.8 billion in 2025. Vehicle sales fell 9% year-over-year, and EV deliveries dropped 16% in Q4. Despite this, the company beat Wall Street estimates for the quarter.