Tesla is phasing out production of its Model S and Model X vehicles by 2026, shifting its Fremont, California factory entirely to the production of its Optimus humanoid robots. The decision, announced by CEO Elon Musk during the latest earnings call, marks a decisive pivot towards artificial intelligence and robotics, signaling a strategic realignment for the electric vehicle giant.
The End of an Era for Flagship EVs
The Model S, launched in 2012, and the Model X, debuting in 2015, were once Tesla’s premier offerings. While both vehicles received updates in recent years – including range improvements and minor design tweaks – sales numbers pale in comparison to the company’s more popular models. In 2025, Tesla sold over 1.6 million Model 3 and Model Y units, while combined sales of the Model S, Model X, and Cybertruck totaled just 50,850 vehicles.
Why This Matters: A Bet on the Future of Automation
This move isn’t just about numbers; it’s a clear indication of Tesla’s long-term vision. Musk stated the decision was “sad,” but necessary, with the goal of achieving annual production of up to 1 million Optimus robots once the transition is complete. The company is doubling down on AI and robotics, believing that autonomous systems represent the future.
This is a significant step beyond simply building EVs. Tesla isn’t just making cars; it’s developing a fully integrated ecosystem of hardware and software, including robots designed for labor, service, and potentially, wider automation. The move highlights the increasing importance of robotics in modern manufacturing.
What’s Next for Tesla?
Tesla will continue to produce its high-volume Model 3, Model Y, and Cybertruck. The Fremont factory will be repurposed for Optimus production, signaling a full commitment to the robot project. The company believes the market potential for humanoid robots is massive, given the growing demand for automation across industries.
“We’re really moving into a future that is based on autonomy,” Musk said.
The shift is aggressive, but reflects Tesla’s willingness to disrupt established industries – even its own. The decision to prioritize robots over its legacy flagship models is a bold statement about where the company sees the greatest opportunities for growth.
Ultimately, Tesla is betting that robots, not just electric cars, will define its future. The transition from car manufacturing to robot production marks a pivotal moment for the company, signaling a shift toward a more automated and AI-driven future.
