Tesla Shifts Focus to Robotics, Ending Model S and X Production

Tesla CEO Elon Musk announced the company will discontinue production of its Model S and Model X vehicles, signaling a strategic shift towards robotics and artificial intelligence. The decision, revealed during Tesla’s fourth-quarter earnings call, marks the complete of an era for the company’s longest-running vehicle models.

End of an Era for Model S and X

Musk described the move as giving the Model S and X programs an “honorable discharge.” According to CNBC, the Fremont, California factory currently producing these vehicles will be repurposed for the manufacturing of Optimus humanoid robots.

The Model S, launched in 2012, and the Model X, introduced in 2015, have been Tesla’s flagship vehicles for over a decade. However, in recent years, the company has faced increased competition in the electric vehicle market, leading to price cuts for these models. Electrek reports that Tesla stopped reporting sales figures for the Model S and X separately in 2023, grouping them with the Cybertruck and Tesla Semi under an “other models” category.

Declining Sales and the Rise of Model 3 and Y

Tesla’s more affordable Model 3 and Model Y vehicles have turn into significantly more popular, accounting for 97% of the company’s 1.59 million deliveries last year. CNBC notes that the Model 3 currently starts at around $37,000, while the Model Y is priced around $40,000, compared to the Model S’s $95,000 and the Model X’s $100,000 starting prices.

Tesla experienced its first annual sales decline in 2025, with sales falling in three of the past four quarters. USA Today highlights that Model S/X deliveries dropped significantly, with estimates suggesting around 30,000 units sold globally in 2025, even when including Cybertruck and Tesla Semi sales.

Focus on Autonomy and AI

Musk has increasingly emphasized the importance of autonomous driving and artificial intelligence, particularly with projects like fully autonomous driving (FSD) and the Optimus humanoid robot. Electrek reports Musk’s reasoning for ending Model S and X production as being centered around “autonomy.”

Tesla is planning to build a large-scale semiconductor production facility, dubbed “Terra fab,” in the United States to support its AI ambitions. USA Today mentions Tesla’s recent contract with Samsung Electronics to produce A16 chips worth $16.5 billion, indicating a significant investment in semiconductor technology.

Timeline and Future Outlook

Tesla plans to discontinue the Model S and Model X by the end of the second quarter of 2026. Electrek reports this timeline, while USA Today states production will halt this spring. This shift signifies a major strategic realignment for Tesla, prioritizing robotics and AI development over its traditional luxury electric vehicle offerings.