Tesla Prepares to Retire Model S, Model X to Build More Humanoid Robots

Elon Musk says it’s time to retire the luxury EVs and go all-in on Optimus robots and robotaxis.

In a move that underscores just how far the company has drifted from its roots as a carmaker, Tesla announced it will stop making the Model S sedan and Model X SUV and turn their factory over to building humanoid robots instead.

On Tesla’s fourth-quarter earnings call Wednesday, Musk said production of both models will end next quarter. The Fremont, California, assembly lines that built them will be converted to manufacture Tesla’s Optimus robots, with a long-term goal of making one million robots a year in that space.

“It’s time to basically bring the Model S and X programs to an end with an honorable discharge,” Musk said during the call. “If you’re interested in buying a Model S or X, now would be the time to order it.”

The shift from cars to ‘physical AI’

The decision marks a symbolic turning point for Tesla.

The Model S, launched in 2012, helped redefine electric cars as desirable, high-performance machines. The Model X followed with its dramatic Falcon-wing doors. Together, they propelled Tesla from a niche player to the world’s most valuable automaker.

But now, Musk is steering Tesla into what he calls a “future of amazing abundance” driven by AI and robotics, even as the company’s car business shows signs of strain.

Tesla reported its first annual revenue decline in 2025, with automotive revenue down 11% year-over-year in the fourth quarter. Meanwhile, the company is pouring money into new ventures: it plans to spend more than $20 billion in capital expenditures this year on factories for robots, its dedicated “Cybercab” robotaxi, semiconductors, and AI infrastructure.

Robotaxis and robots take center stage

Musk’s vision is clear: transportation will soon be autonomous, and Tesla wants to provide it as a service.

He said on the call that Tesla has begun giving paid rides in Austin, Texas, with no safety monitor in the car, a step toward fully driverless robotaxis. He expects Tesla’s robotaxi service to be available in “somewhere between a quarter and half of the United States” by year’s end, pending regulatory approval.

As for robots, Musk said the upcoming Optimus Gen 3 — set to be unveiled in a few months — will be “an incredibly capable robot” that can learn tasks by watching humans. He believes Optimus will eventually have a “very significant impact on the US GDP.”

What happens to Tesla’s car business?

With Model S and X gone, Tesla’s vehicle lineup will consist of the high-volume Model 3 and Model Y, the Cybertruck, and the upcoming Cybercab and next-generation Roadster.

Musk hinted that, in the long run, almost all Tesla vehicles will be autonomous. “Long-term, the only vehicles that we’ll make will be autonomous vehicles,” he said, except for the new Roadster, which is expected to debut in April.

He also downplayed the importance of traditional car sales in the future, suggesting that in an autonomous world, “probably less than 5% of miles driven will be where somebody’s actually driving the car themselves.”

Investors bet on the future, not the present

Despite the drop in automotive revenue, Tesla’s stock rose after the earnings report, a sign that investors are valuing Musk’s AI and robotics promises more than today’s car sales.

Tesla also confirmed a $2 billion investment in Musk’s AI startup, xAI, after what Musk described as shareholder interest. “A lot of investors asked us to do this,” he said on the call. “We’re just doing what shareholders asked us to do pretty much.”

Related reading: Chinese humanoid robot makers are moving into the US market, adding fresh competition to Tesla’s Optimus ambitions.