Tesla ends Model S and X production to build humanoid robots as revenue drops for first time

Tesla is killing off its Model S and X cars to make robots

Tesla will "basically stop the production" of its Model S and X electric vehicles next quarter, CEO Elon Musk has announced at the automaker's earnings call for the 2025 fiscal year. "It's time to bring the Model S and X program to a end with an honorable discharge, because we're really moving into a future that's based on autonomy," Musk said. You can still buy the vehicles as long as there are units to be sold, and Tesla promises to support them for as long as people have them. Once they're gone, though, they're gone for good, because Tesla is converting their production space in the company's Fremont factory into a space for the manufacturing of Optimus humanoid robots. Model S is Tesla's second vehicle and has been in production since 2012, while the Model X SUV has been in production since 2015. Their shine has faded over the years, however, and the newer Model 3 and Y now make up the bulk of the company's sales. For the entirety of 2025, for instance, Tesla delivered 1,585,279 Model 3 and Y vehicles but only sold 418,227 Model S and X units. The company also had to stop selling Model S and X in China in mid-2025, because they were being imported from the US and were subject to China's tariffs that were put in place in response to US President Donald Trump's tariffs on imported goods. In the call, Musk said that Tesla's long-term goal is to be able to manufacture 1 million Optimus robots in the current Model S and X production space. At the World Economic Forum in Davos, Switzerland a few days ago, the CEO announced that Tesla will start selling Optimus to the public by the end of next year. Musk has big plans for Optimus and once said that it's bound to become the "biggest product of all time," bigger than cellphones, "bigger than anything." But the humanoid robot has been failing to live up to the hype during demonstrations, and Musk is known for his overly optimistic timelines. The company's earnings report has also revealed that Tesla invested $2 billion in Musk's other company, xAI. Tesla's shareholders notably sued Musk in 2024 for starting xAI, which they argued is a direct competition to the automaker. The CEO has been claiming for years, after all, that Tesla is an AI company and not just an EV-maker. Still, Tesla's shareholders approved Musk's $1 trillion pay package in late 2025 on the condition that the company reaches a market value of $8.5 trillion.

Tesla sees first annual revenue drop as it shifts to AI and robots

Tesla says its annual revenue has fallen for the first time as the electric vehicle (EV) maker shifts it focus to artificial intelligence (AI) and robotics. The company, which is run by multi-billionaire Elon Musk, reported a 3% decline in total revenues in 2025, while profits fell 61% in the last three months of the year. Tesla also announced plans to end production of its Model S and Model X vehicles. It will now use the manufacturing plant in California that made those cars to produce its line of humanoid robots - known as Optimus. In January, China's BYD overtook Tesla as the world's biggest EV maker, while Musk's involvement in politics both in the US and abroad has proved controversial. Tesla also revealed a $2bn (£1.45bn) investment in Musk's artificial intelligence venture, xAI. "A lot of investors asked us to do this," Musk said of Tesla's participation in xAI's latest funding round. "They say we should invest in xAI, so we're just doing what shareholders asked us to do pretty much." The move comes despite a recent vote taken by Tesla shareholders on a proposal to invest in xAI. Abstentions and votes against the idea outnumbered those who approved. Last year, investors overwhelmingly voted to grant Musk - the world's richest person - a record-breaking pay package that could be worth nearly $1tn. To collect that payout he must drastically raise the firm's market value over the next 10 years. The company is also due to significantly ramp up spending, by an estimated $20bn. "It's going to be a very big [capital expenditure] next year," Musk said on a call with analysts. "We're making big investments for an epic future." Tesla shares rose by about 2% in extended trading. It comes after Musk's entry into politics, including a high-profile cost-cutting role in the administration of US President Donald Trump. His political activities alienated parts of Tesla's customer base, with some protesting at its dealerships around the world. The shift away from its EV roots also coincides with Trump rescinding some US government subsidies for non-fossil fuel cars. Tesla, which was once one of the world's most profitable car companies, has also been pushing deeper into robotaxis. It said last week that human safety drivers were no longer supervising rides in a few cars operating in Austin, Texas where the company has been experimenting with driverless rides. The company's shift into newer businesses also comes as it contends with a dated line of electric vehicle, analysts say. "The Model S and Model X have been low-volume vehicles for Tesla for a while now," said Jessica Caldwell, Head of Insights at Edmunds. "From a portfolio and focus standpoints, it makes sense to drop them and concentrate on higher-volume products like the Model 3 and Model Y, along with other business expansion bets," Caldwell added. Sign up for our Tech Decoded newsletter to follow the world's top tech stories and trends. Outside the UK? Sign up here.

Elon Musk to end Model S and Model X as Tesla targets 1 million humanoid robots yearly

Tesla signaled a major shift in its business as CEO Elon Musk told investors the company will end production of its longest-running premium electric vehicles. During a Wednesday investor call, he said the automaker will discontinue the Model S sedan and Model X SUV, marking a decisive move away from legacy car programs and toward artificial intelligence and robotics. The announcement came alongside the company's latest quarterly earnings, which showed falling vehicle sales but stronger-than-expected profits. The timing underscored how sharply the company's priorities are changing as Musk pushes a future built around robots, autonomy, and AI-powered systems rather than traditional electric cars. The chief executive made the decision clear during the call. "It's time to basically bring the Model S and X programs to an end," he said. "We expect to wind down S and X production next quarter." The Model S and Model X are among the automaker's oldest vehicles. The Model S launched more than a decade ago and helped establish the company as a serious automaker in the US market. The Model X followed with its distinctive Falcon-wing doors and premium positioning. Musk said the Fremont, California, factory that currently produces the two models will be repurposed. Instead of building cars, the facility will be converted to manufacture the company's humanoid Optimus robot. Fremont has been central to Tesla's US operations, making the change a symbolic break from the company's earlier focus on high-end electric vehicles. The long-term goal, as per the tech billinare is to produce 1 million robots per year at the Fremont facility. The earnings report showed a company in transition. The firm described the past year as a "transition from a hardware-centric business to a physical AI company." While vehicle sales declined, investor enthusiasm around AI helped lift the stock. The automaker reported fourth-quarter earnings per share of $0.50, beating Wall Street expectations of $0.45. Revenue reached $24.9 billion, slightly above analyst forecasts of $24.79 billion. Despite the beat, total revenue fell 3 percent year over year, marking the company's first annual decline. Automotive revenue dropped 11 percent in 2025. Earlier this month, the company said vehicle deliveries fell 16 percent year over year in the fourth quarter. Demand weakened most sharply in Europe. After the earnings release, Tesla shares rose as much as 4 percent in after-hours trading before giving back some gains. As car sales slow, Musk is doubling down on AI-driven projects. These include Optimus humanoid robots and autonomous Robotaxis. None of these products is widely available or profitable yet, but executives argue they will define the firm's future. The CEO has repeatedly described Optimus as the "biggest product of all time." He has also said robots and autonomous vehicles could create "a world where there is no poverty." According to the earnings report, the company plans to start producing Optimus before the end of 2026. The tech mogul has said sales to the public could begin in 2027. The automaker also disclosed a $2 billion investment in xAI, the chief executive's artificial intelligence company. On the same call, chief financial officer Vaibhav Taneja said capital expenditures are expected to reach about $20 billion, far above many analysts' predictions. The company's stock has been volatile over the past year. Shares fell during his time in government but rebounded sharply in December, reaching a record high amid intense market interest in AI. In November, shareholders approved a pay package that could eventually award him up to $1 trillion if the company meets a series of ambitious targets. Not all of Tesla's products are thriving. The Cybertruck, which Musk recently called "the best vehicle Tesla has ever made," saw sales fall 48 percent last year, according to Kelley Blue Book data. Competition is also intensifying. China's BYD overtook Tesla last year to become the world's largest electric carmaker. BYD's sales grew 28 percent in 2025, driven by lower-priced vehicles that appeal to cost-conscious buyers in multiple markets.

Tesla reveals $2 billion investment in Elon Musk's xAI and officially kills the Model S and Model X | Fortune

The moves, remarkable even in the context of Musk's unfettered management style, underscore the profound transformation underway at the car maker as it loses ground in the EV market to Chinese rivals. In place of the discontinued car models, Musk said that Tesla will use the freed up factory space to build Optimus robots, a still largely experimental line of humanoid robots that Musk says will eventually perform everything from household chores to surgery. Tesla executives emphasized that the investment in xAI would build efficiencies for Tesla, as it wouldn't have to expend similar resources on AI, and Musk said it would ultimately help Tesla manage the enormous fleets of autonomous vehicles and Optimus robots. "We're just doing what shareholders asked us to do, pretty much," Musk said Wednesday evening on the call, noting that "a lot" of investors had asked for the investment in xAI. Shares of Tesla were up about 1.8% in after-hours trading on Wednesday following the results. Revenue was down 3% year-over-year in the fourth quarter, which some analysts have cited due to a slowdown in EV sales because of the end of federal tax credits. Still, Tesla beat Wall Street targets, posting $24.9 billion in revenue versus $24.8 billion estimates. Musk highlighted that Tesla had changed its mission to "build a world of amazing abundance," from "to accelerate the world's transition to sustainable energy," and spoke about how the most likely path of AI was to help all humans obtain "universal high income" and better medical care. The language used on the call, which included mention of a hypothetical rare earth refinery, which "we do desperately need in America" hinted at the time he has spent with President Trump over the last year. Tesla has been pulling away from its roots as a carmaker recently, in favor of autonomous software and robotics. "It's time to basically bring the Model S and X programs to an end with an honorable discharge, because we're really moving into a future that is based on autonomy," Musk said. Musk said that Tesla was operating 500 robotaxis across both Austin and San Francisco, and he said that it was conducting "randomly selected paid rides" with no safety driver in Austin, though it's unclear at this time how many unsupervised rides have taken place. For the first time, Tesla shared this quarter how many of its customers were purchasing its Full Self Driving (FSD) software. There were 1.1 million subscriptions in 2025, up from 800,000 in 2024. Musk has been making promises on autonomy for over a decade, though he has been far behind in his timelines and the company has yet to deliver much profit from this line of its business. On Wednesday's earnings call, CFO Vaibhav Taneja said of Tesla's robotaxi fleet that, because Tesla was still in the "early phase" of its fleet deployment and still doing a lot of validation and testing, the "revenue and cost per mile metrics are not meaningful to discuss at the moment." Taneja also talked up the investment in xAI, noting that Grok, the chatbot made by xAI, was already in use across Tesla's fleet. "Today, if you look at Tesla vehicles, we are using Grok in there," he said. During his appearance at the World Economic Forum in Davos earlier this month, Musk said that Tesla planned to begin selling Optimus robots by the end of next year. By repurposing the space in its Fremont factory, Tesla said Wednesday, it will be able to build 1 million Optimus robots each year.

The Tesla Model S And X Are Dying Next Quarter To Make Room For Robots

It's the end of the road for two of Tesla's longest-running electric vehicles. The Model S sedan and Model X SUV will be discontinued next quarter, CEO Elon Musk said on the company's earnings call on Wednesday. Tesla plans to convert the space at its Fremont, California, factory where the Model S and Model X were built into a facility to produce Optimus humanoid robots instead. "It's time to basically bring the Model S and X programs to an end with an honorable discharge, because we're really moving into a future that is based on autonomy," he said. Musk said it was a "sad" moment, but said it's part of the company's transition from an EV company into an AI and robotics firm. The production space where the Model S and X are currently produced will eventually churn out 500,000 Optimus robots annually, Musk said. The Model S launched in 2012 as Tesla's first mass-produced vehicle after the Roadster, which was more of a proof of concept. It won numerous accolades and helped put electric cars on the map as a long-range, high-performance option. Tesla followed that up with the Model X, a three-row SUV with flashy gull-wing doors, in 2015. This story is developing. Check back for updates.

Tesla discontinues flagship EV models in Optimus robot and AI U-turn

Elon Musk's electric vehicle company is trading two of its models for a new model: The humanoid robot kind. Tesla will discontinue two of its electric vehicle models and instead focus on the production of its upcoming Optimus humanoid robot, in the clearest sign that Elon Musk's company is shifting gears and pulling away from the EV business. The billionaire said in an earnings call on Wednesday that it would discontinue production of its Model X SUV and Model S full-size sedan. "It's time to basically bring the Model S and X programs to an end," Musk said. "We expect to wind down S and X production next quarter." Humanoid robots have accelerated thanks to the development of physical artificial intelligence (AI). Tesla also said earlier this month it willinvest $2 billion (€1.6 billion) into xAI, Musk's AI company. Optimus has been years in the making and Musk has said the robot would be the "biggest product of all time". While it may appear that electric vehicles are taking a back seat, this is not the case, argues Dan Coatsworth, head of markets at the investment platform AJ Bell. "Tesla still needs this part of its business to tick over smoothly as it helps fund Musk's robot vision, which is getting bigger by the day," he said. Last week at the Davos conference, he said that his could raise living standards globally, including eliminating poverty. "If you have ubiquitous AI that is essentially free or close to it and ubiquitous robotics, you will have an explosion in the global economy that is truly beyond all precedent," he said. Tesla announced that it would begin production of Optimus before the end of 2026. Musk has said the robot will be for sale to the public in 2027. However, the release date for the robot has previously varied. Optimus was designed to be used in Tesla factories and on production lines. It weighs about 56 kg and is about 170 cm tall. Musk has previously said his aim is for the robot to be mass-produced and cost less than $20,000 (€18,000) each.

Tesla axes EV models in drive for robotics revenue

Investors liked what they heard about the future following the company's latest results, but Elon Musk is under huge pressure to deliver on his vision as a series of targets have been missed. Tesla is to axe production of two electric vehicle (EV) models as part of a shift towards robotics after the company reported its first ever decline in annual revenue. Chief executive Elon Musk told analysts on a conference call that the company would stop selling its older Model S and Model X vehicles and convert factory space to manufacture its Optimus robots instead. Tesla revealed that investment would more than double this year to $20bn (£14.5bn), with $2bn of that sum going to his artificial intelligence division xAI. Money latest: Check how much your water bill is due to rise The spending seeks to make good on a series of promises by Mr Musk relating to Tesla's transition towards self-driving cars and robotics that have, so far, fallen short of targets. Mr Musk's plans to build Cybercabs - robotaxis - have been hampered to date by a lack of capacity and regulatory clearances. He has previously warned that a shortage of memory chips amid the wider rush for AI globally, risks hampering production as it ramps up later this year. Tesla is looking to new revenue streams as its traditional EV space becomes ever more crowded, with China's BYD overtaking the company last year to become the world's biggest EV maker. The US company's revenues and profits suffered in 2025 as core EV sales were battered by a backlash against Mr Musk for his cost-cutting role at the heart of the Trump administration and interventions in foreign elections. The sales Tesla did make were on the back of steep discounts, reflecting not only the often violent boycott of Tesla by political opponents but also the fact that vehicles made by Tesla's competitors are cheaper. A US tax incentive for electric vehicles was also ended by the Trump administration amid Mr Musk's on-off relationship with the president. Read more from Sky News: Man given Musk's Neuralink brain chip in UK Driverless cars coming to London 'this year Tesla shares were up by 2% in after-hours trading - building on cautious gains of last year that have been largely explained by the AI-driven turnaround plans promised by Mr Musk. He is under pressure to meet a share price-based incentive plan, potentially worth up to $1trn over 10 years, but there are fears among some investors that his focus is spread too thin. Mr Musk plans to take his rocket company SpaceX public, possibly in June.

Tesla to scrap S and X models to make room for Musk's robots

London | San Francisco | Tesla on Wednesday (Thursday AEDT) said it will scrap its S and X models and invest $US2 billion ($2.8 billion) into Elon Musk's xAI as the company shifts focus from cars to AI and robotics, after reporting its first-ever fall in annual profits. Revenue decreased by 3 per cent to $US24.9 billion in the fourth quarter from the year before, in line with the average $US24.8 billion analyst estimate. That meant its 2025 revenues of $US94.8 billion came in 3 per cent lower than the previous year.

Tesla parks models S and X to bet big on humanoid robots

Tesla is phasing out its Model S and Model X electric cars. Production is expected to end soon. This move frees up factory space for Optimus, Tesla's humanoid robot. Elon Musk believes robots will become the company's main business. Customers interested in these models should order now. Owners will still receive support. Elon Musk-led Tesla is preparing to retire two of the vehicles that defined its early rise, as the electric carmaker reshapes its manufacturing priorities around humanoid robotics. "It's time to basically bring the Model S and X programs to an end with an honorable discharge," said the tech mogul. "If you're interested in buying a Model S and X, now would be the time to order it." Speaking during the company's latest earnings call on Wednesday, CEO Musk said production of the Model S and Model X would be phased out, potentially beginning next quarter. Also Read | Tesla plots $20 billion spending spree to build Elon Musk's AI future As such, Tesla said customers will still be able to purchase the vehicles for a limited period, and that owners will continue to receive support after production ceases. The decision marks the end of Tesla's longest-running car lines, both of which played a formative role in turning the company into a global electric vehicle pioneer. Introduced more than a decade ago, the Model S set new benchmarks for electric performance and range, while the Model X followed with distinctive design features and premium positioning. Over time, however, their relevance has diminished as Tesla's focus shifted to higher-volume, lower-cost vehicles. Also Read | AI could be smarter than all of humanity in five years, says Elon Musk The retirement of the two models will free up space at Tesla's Fremont, California factory, which the company plans to convert into a dedicated facility for Optimus, its humanoid robot programme. According to the CEO, the dismantling of the Model S and Model X assembly line at its Fremont facility and subsequent replacement of it with a dedicated Optimus production line will lead to one million units annually. Tesla's decision comes at a moment of financial strain, with the company reporting its first-ever annual decline in revenue. Musk has argued that driverless vehicles and humanoid robots will eventually eclipse traditional automobiles as the company's core business. (You can now subscribe to our Economic Times WhatsApp channel)

Elon Musk Says Tesla Model S, X Production To End, Cybertruck To Transition To An Autonomous Vehicle With Fleet Future: 'It's Time To Bring...' - Tesla (NASDAQ:TSLA)

Tesla Inc. (NASDAQ:TSLA) will stop producing the Model S, as well as the Model X, CEO Elon Musk confirmed during the company's fourth-quarter earnings call. Tesla Ends Model S, Model X Production During Tesla's Q4 earnings call on Wednesday, Musk relayed the news to investors and analysts that the automaker would be scrapping its two premium offerings. "It's time to bring the Model S and X programs to an end with an honorable discharge," Musk said, adding that Tesla intends to "basically stop production" of the vehicles next quarter. The company has delivered an estimated 730,000 to 740,000 units of both cars since their introduction in 2012 and 2016. Musk also outlined that the Model S and X production at the Fremont, California, facility would be converted to produce the Optimus humanoid robot as Tesla shifts "to an autonomous future." Speaking of which, Musk also shared that the Cybertruck would be converted to a "fully autonomous line" in the future, adding that it could be used for transporting cargo autonomously. The Cybertruck has been a miss for Tesla so far, with the company struggling to move units off the showroom lots and sales declining consistently. In 2025, the Cybertruck experienced a 48% plunge in sales. It Is Still A Little Sad, Says Elon Musk Responding to a post on the social media platform X on Wednesday, Musk shared that it was sad to see the two models being pulled out of the automaker's lineup. "S and X will always continue to exist in the fleet, just not in production, but it is still a little sad," he said. Tesla Q4 Earnings, xAI Investment The company also announced a $2 billion investment into Musk's artificial intelligence company xAI, with the deal expected to be finalized in the first quarter of 2026, provided it clears regulatory hurdles. According to Benzinga Edge Rankings, Tesla scores well on the Momentum metric and offers a favorable price trend in the Long term. Price Action: TSLA jumped 2.01% to $440.13 during Overnight trading on Wednesday. Check out more of Benzinga's Future Of Mobility coverage by following this link. Photo courtesy: Del Harper via Shutterstock Market News and Data brought to you by Benzinga APIs