Tesla has announced the end of production for its Model S and Model X vehicles, marking a decisive shift away from its electric car business. During an investor call, chief executive Elon Musk confirmed the phase-out, stating that the Fremont factory currently building these models would be converted to manufacture the company’s forthcoming Optimus robot.
The move comes as Tesla reported its first ever annual decline in total revenue, down 3% year-on-year to $24.9bn. However, the company beat Wall Street earnings expectations with earnings per share of $0.50. Automotive revenues fell 11%, while fourth-quarter vehicle deliveries dropped 16%. Despite this, Tesla’s stock rose up to 4% in after-hours trading.
Musk has increasingly positioned Tesla as an artificial intelligence and robotics company. The Optimus humanoid robot, which he has called “the biggest product of all time”, is slated to begin production before the end of 2026, with public sales planned for 2027. Tesla also invested $2bn into Musk’s AI firm xAI earlier this month. The company plans capital expenditure of $20bn, far exceeding analyst estimates.
However, Tesla faces mounting challenges. Sales of the Cybertruck plunged 48% last year, and competition from Chinese rival BYD, which overtook Tesla as the world’s largest electric carmaker in 2025, is intensifying. BYD’s sales grew by 28% last year, offering cheaper alternatives to Tesla’s models.
