Tesla is retiring the Model S and Model X to refocus resources on AI, robotics and autonomy, signalling a decisive shift away from its early EV flagships as Elon Musk bets the company’s future on higher-risk, higher-growth technologies.
Tesla is winding down two of its longest-running electric vehicles as Elon Musk pivots to robotics.
The company confirmed this week that it will end production of the Model S and Model X, redirecting the California factory that built them toward manufacturing its humanoid robot, Optimus.
The decision comes alongside sobering financial results for 2025, with Tesla reporting its first annual revenue decline and a sharp fall in late-year profits.
Tesla said total revenue fell three per cent last year, while profits dropped 61 per cent in the final quarter.
The slowdown reflects intensifying competition in the EV market, softer demand, and Tesla’s growing focus on capital-intensive bets beyond cars.
Earlier this month, China’s BYD overtook Tesla as the world’s largest EV manufacturer by sales, underscoring how quickly the landscape has shifted.
On an earnings call, CEO Elon Musk framed the changes as part of a long-term strategy.
Tesla disclosed a $2 billion investment in Musk’s AI company xAI and said it plans to significantly ramp up capital spending, potentially by as much as $20bn, to support robotics, AI training and autonomous systems.
He said: “We’re making big investments for an epic future.”
The move away from the Model S and X is less surprising than it may sound.
Both vehicles have been low-volume sellers for several years, eclipsed by the cheaper, mass-market Model 3 and Model Y.
Analysts say dropping them allows Tesla to simplify its lineup while freeing up manufacturing capacity for higher-growth projects such as Optimus and robotaxis.
Still, the pivot carries risks, as Musk’s increasingly visible political activity has alienated some customers, and recent changes to U.S. policy have reduced subsidies for electric vehicles.
At the same time, Tesla is betting heavily on technologies that remain largely unproven at scale.
Investors appear cautiously optimistic for now, with Tesla shares ticking up in extended trading.
Tesla scrapping Model X and S EVs as Elon Musk pivots to robotics
