Elon Musk Says Tesla Ending Models S and X Production as Revenue Declines

Elon Musk confirms Tesla ending Models S and X production as revenue falls for the first time, with Fremont factory shifting focus to Optimus robots

Tesla CEO Elon Musk has confirmed that Tesla ending Models S and X production marks a major strategic shift for the electric vehicle maker, as the company also reported its first-ever annual revenue decline. Speaking during Tesla’s Q4 earnings call on January 28, Musk described the decision as an “honorable discharge” for the two legacy vehicles that helped define the brand’s early success.

According to Musk, Tesla ending Models S and X production will allow the company to repurpose its Fremont, California factory for the manufacturing of its humanoid robot, Optimus. He urged loyal customers to place orders soon, noting that remaining inventory will be limited once production officially stops.

Why Tesla Is Phasing Out Model S and Model X

Launched in 2012 and 2015 respectively, the Model S and Model X were among Tesla’s earliest mass-market offerings, with base prices hovering around $95,000 to $100,000. Over time, however, Tesla’s sales momentum has shifted decisively toward the more affordable Model 3 and Model Y.

In 2025 alone, Model 3 and Model Y deliveries accounted for nearly 97% of Tesla’s total vehicle sales, underscoring why Tesla ending Models S and X production makes commercial sense. Despite multiple price cuts across its lineup, demand for the premium models has lagged amid intensifying global EV competition.

Revenue Decline Adds Pressure

The announcement comes as Tesla reported its first annual revenue drop on record. According to Reuters, revenue fell about 3% year-on-year to roughly $94.8 billion in 2025. While adjusted earnings per share beat expectations in the fourth quarter, net income plunged 61% to $840 million.

Against this backdrop, Tesla ending Models S and X production signals a broader reset as the company looks beyond traditional car manufacturing for future growth.

Fremont Factory to Focus on Optimus Robots

Musk revealed that the Fremont facility will be retooled to support mass production of Optimus, Tesla’s humanoid robot. He said the company plans to replace the Model S and X production lines with a robot assembly line capable of producing up to one million units per year.

The move reinforces Tesla’s growing emphasis on robotics and artificial intelligence. As Musk outlined, Tesla ending Models S and X production frees up resources for what he believes could become one of the company’s most valuable long-term businesses.

A Turning Point for Tesla

With bets on autonomous driving, humanoid robots, and even in-house chip manufacturing, Tesla ending Models S and X production represents more than the retirement of two vehicles. It marks a turning point as Tesla pivots from its past to pursue a future increasingly defined by AI, automation, and robotics.