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Tesla Axes Model S and Model X: Full Pivot to Robotics in 2026
Elon Musk dropped a bombshell during Tesla's Q4 2025 earnings call on January 28, 2026: production of the iconic Model S sedan and Model X SUV will wind down next quarter, with manufacturing halting entirely in 2026. This marks the end of Tesla's longest-running models, which paved the way for the company's dominance in electric vehicles since their debuts in 2012 and 2015, respectively.
"It’s time to basically bring the Model S and X programs to an end with an honorable discharge," Musk stated on the call. He urged potential buyers to order now, as factory space at Tesla's Fremont, California plant gets repurposed for high-volume Optimus humanoid robot productiontargeting up to 1 million units annually.
Financial Pressures Driving the Decision
Tesla's Q4 2025 results underscore the urgency. Revenue dipped 3% to $24.9 billion quarter-over-quarter, while full-year 2025 revenue landed at $94.8 billion, down 3% from 2024. EV sales plummeted 16% in Q4 year-over-year, with total 2025 deliveries at 1.64 million vehiclesa 9% decline. Model 3 and Model Y now dominate, comprising the bulk of deliveries, as Tesla slashed prices on S and X amid fierce global competition from rivals like BYD and legacy automakers ramping up EVs.
The pivot aligns with Tesla's broader strategy. Musk highlighted Optimus as the future, with a third-generation design slated for unveiling this quarteroptimized for mass production. "Because it is a completely new supply chain, there’s really nothing from the existing supply chain that exists in Optimus," he explained. Tesla plans six new production lines in 2026 across vehicles, robots, energy storage, and batteries, leveraging existing factories for growth.
Technical Deep Dive: From EVs to Humanoids
Model S pioneered Tesla's tech with its 405-mile EPA range (Plaid variant), Ludicrous Mode acceleration (0-60 mph in 1.99 seconds), and over-the-air updates. Model X added falcon-wing doors, 333-mile range, and seven-seat capacity, but both faced declining demand as mass-market Model 3/Y scaled. Production volumes for S/X never exceeded tens of thousands annually, dwarfed by 3/Y's millions.
Optimus shifts gears entirely. Standing 5'8" tall and weighing 125 lbs, the Gen 2 robot walks at 5 mph, lifts 45 lbs, and performs tasks like folding laundry or sorting objects via end-to-end neural networks trained on vast video data. Tesla's Dojo supercomputer accelerates this AI, enabling human-like dexterity without rigid programming. Fremont's retooling involves new assembly lines for Optimus's custom actuators, sensors (including tactile feedback), and 303V battery packsdistinct from automotive gigacastings and 4680 cells.
- Key Optimus Specs: 11 degrees of freedom per hand, force-sensing fingers, integrated compute for real-time inference.
- Production Goal: 1M/year by late 2026, starting with internal factory use then external sales.
- Cost Target: Under $20K/unit at scale, per Musk's prior comments.
Industry Impact and Market Reaction
TSLA stock dipped slightly to $430.46 post-call (-0.10%), reflecting investor digestion of sales declines but optimism for robotics. This move signals Tesla evolving beyond cars into a robotics powerhouse, potentially disrupting labor markets in manufacturing and logistics. Competitors like Boston Dynamics and Figure AI accelerate, but Tesla's vertical integrationAI from Autopilot, manufacturing scalegives it an edge.
Background: Model S won Motor Trend Car of the Year 2013; Model X pushed SUV electrification. Yet, with Cybertruck ramping and Robotaxi delayed, legacy models became low-margin relics. Tesla's Q4 production hit 434K vehicles, deliveries 418K, plus record 14.2 GWh energy storagehinting at diversified revenue streams.
Looking ahead, 2026 brings Optimus ramp, next-gen vehicles, and energy growth. Tesla's statement: "We will further invest in infrastructure for clean energy, transport, and autonomous robots." This isn't just a production haltit's Tesla redefining mobility and automation.