In the clearest signal yet that Tesla is moving away from the electric car business, CEO Elon Musk announced to investors that production of the Model X SUV and the luxury Model S sedan is being halted.
„It is time to end the Model S and X programs,” Musk stated, as quoted by The Guardian.
The Model S and X factory in Fremont, California, will be retooled to produce Tesla's future Optimus robot, Musk said.
Tesla's most recent quarterly earnings report showed a decline in vehicle sales and revenues as Musk now focuses on artificial intelligence and robotics.
The report described Tesla's tumultuous year as a "transition from a hardware-centric business to a physical artificial intelligence company."
Musk's grand hopes and ambitious possibilities have helped Tesla exceed Wall Street expectations, even as the company reported its first total revenue decline, losing 3% from the previous year.
Tesla reported earnings per share of $0.50 after Wednesday's market close, surpassing Wall Street's expected $0.45. Its reported revenues were $24.9 billion, exceeding analysts' estimates of $24.79 billion.
The company's total revenues from the auto industry fell by 11% from the previous year in 2025. Earlier this month, Tesla reported vehicle delivery figures for the fourth quarter, which measure the receipt of cars by buyers rather than dealer sales, revealing a 16% decline from the previous year, particularly impacted by waning interest in Europe.
The company's shares rose by up to 4% in after-hours trading before paring back gains.
As Tesla vehicle sales have declined over the past year, Musk and the company have shown a shift towards AI-based projects, such as the Optimus robots and autonomous driving Robotaxis.
These technologies are currently unproven and far from profitable, but they allow Musk to promise unprecedented future growth.
Musk stated that Optimus will be "the biggest product of all time" and said that robots, along with autonomous vehicles, will usher in "a world where there is no poverty."
Tesla plans to begin Optimus production before the end of 2026, according to the earnings report. Musk stated that the company will sell the robot to the public in 2027.
Tesla also revealed that earlier this month it agreed to invest $2 billion in xAI, Musk's artificial intelligence company.
Tesla's Chief Financial Officer, Vaibhav Taneja, stated that the company's capital expenditures will be $20 billion, a massive sum much larger than what many analysts had estimated.