In the strongest indication yet that Tesla is moving away from its traditional electric car business, CEO Elon Musk has confirmed that the company will soon end the production of its flagship premium vehicles. During Wednesday’s investor call, Musk announced that , “It’s time to basically bring the Model S and X programs to an end.
Tesla Discontinues Model S and Model X as Elon Musk Shifts Focus to AI and Robotics
According to Musk, the Fremont, California, facility currently manufacturing the Tesla Model S and Tesla Model X , will be reconstruct to build Tesla’s upcoming humanoid robot, Optimus, a move that underlines the company’s aggressive shift toward artificial intelligence and robotics.
Falling Vehicle Sales, Rising AI Ambitions
Tesla’s latest quarterly earnings report paints a picture of a company in transition. Vehicle sales continued to slide, while overall revenue declined as Musk doubled down on what he described as a transformation from a “hardware-centric business” into a “physical AI company.”
Despite the turbulence, Tesla managed to beat Wall Street expectations. The company reported earnings per share of $0.50 for the fourth quarter, higher than the anticipated $0.45. Revenue came in at $24.9 billion, narrowly exceeding analyst estimates, even as Tesla recorded its first-ever year-over-year revenue decline of 3%.
However, the core automotive business struggled. Total automotive revenue dropped 11% in 2025, and fourth-quarter vehicle deliveries fell 16% compared to the previous year. Weak demand in Europe was a major contributor. Tesla’s stock initially climbed by as much as 4% in after-hours trading before giving up some of those gains.
Optimus, Robotaxis, and the Bet on the Future
With the end of the Tesla Model S and the Tesla Model X, Musk and his leadership team are progressively positioning the future of the company around AI-driven products. These are Optimus consumer robots and fully autonomous robotaxis technologies, which are mostly untested and not yet commercial production size.
Musk has repeatedly referred to Optimus as the largest product that has ever existed, which could assist in establishing a future where there is no poverty. In 2026, Tesla expects to start Optimus production and start selling publicly in 2027. The company also announced a spending of 2 billion dollars in xAI, which is a separate AI project of Musk.
Tesla CFO Vaibhav Taneja disclosed that capital spending will hit a goal of $20 billion, much higher than most analysts estimates, and how extensive the Tesla AI and robotics initiative is.
Stock Rebound, Cybertruck Struggles, and Rising Competition
Although Tesla’s share price suffered during Musk’s controversial stint in government last year, it rebounded sharply in December amid renewed enthusiasm for AI stocks and Musk’s talk of building a “robot army.” Shareholders also approved a massive performance-linked pay package that could eventually be worth up to a trillion dollars.
Still, not all of Tesla’s futuristic bets are paying off. The Cybertruck, once hailed by Musk as Tesla’s best vehicle ever, reportedly saw a steep 48% drop in sales last year, according to industry data.
Meanwhile, competition in the global EV market is intensifying. China’s BYD overtook Tesla as the world’s largest electric carmaker, posting 28% sales growth in 2025 by offering more affordable alternatives across multiple markets.
With Tesla discontinuing Model S and Model X, the company is clearly signaling a historic pivot. Whether Tesla’s bold AI and robotics strategy will deliver the “unparalleled growth” Musk promises or further strain its core business remains one of the biggest unanswered questions in the global technology and automotive industries.
Conclusion
As Tesla winds up the Model S and Model X, it is evident that the firm is indicating a historic turn. The question of whether Tesla will provide the unparalleled growth that Musk says it will, by his audacious AI and robotics strategy, or simply more overload its main business is one of the biggest unresolved mysteries in the global technology and automotive sectors.