Tesla pioneers, Model S and Model X no longer sell well; retirement opens space at the brand's factory in California for the manufacture of robots
In a strategic shift that indicates Tesla’s transformation from a car manufacturer to an artificial intelligence company, CEO Elon Musk announced the end of production of the Model S and Model X models.
The decision comes at a critical time: Musk called the move an “honorable farewell” to the veterans of the fleet, launched in 2012 and 2015, respectively. Although they have been vital to establish the brand in the premium segment, recent numbers have made its continuity unsustainable in the face of the company’s new objectives.
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The rationale for the closure is purely pragmatic. Last year, the Model S sedan and the Model X SUV added up to about 56 thousand deliveries, representing a paltry 3% of Tesla’s total volume. The market was dominated by the entry-level Model 3 and Model Y models, which accounted for 97% of sales.
In addition to the low representativeness in sales, the financial context weighed. The announcement came on the heels of the fourth-quarter earnings report, which revealed the first annual revenue decline in the company’s history and a 4% decline in shares after the market closed. With prices ranging between $95,000 and $100,000, luxury models have lost relevance on the industrial scale that Musk is aiming for.
The vacuum left by the cars in Fremont will be filled by a bold bet. The plant will undergo a complete reconfiguration to manufacture Optimus. Musk’s goal is ambitious: to produce more than 1 million units of the humanoid robot per year.
According to the executive, the third generation of the robot has already had its design finalized and should be officially presented in the third quarter of 2026. Tesla plans to increase the number of employees in California to support this new assembly line, which will require a supply chain distinct from the automotive. In Musk’s view, the company’s future is no longer on four wheels, but in autonomous bipedal robotics.
