Elon Musk, Tesla’s chief executive who elevated a startup electric car firm into an industry disruptor, has terminated manufacture of the Model S and Model X. These premium models paved the company’s path but now yield factory space to humanoid robots amid persistent profit and sales declines.
The announcement came in Wednesday’s earnings call. Output of these top-priced sedan and SUV lines will cease by mid-2026, with California facilities switching to Optimus robot production.
Musk suggested electric vehicles—which Tesla mainstreamed worldwide—will soon play a lesser role.
He predicted the Cybercab robotaxi, a two-seater without steering wheel or pedals, will sell “several times more” than all other Tesla models combined.
Tesla’s robotaxi service remains nascent, using staff as “safety monitors” unlike rivals’ driverless fleets in many cities. Vehicle sales and profits, key to funding autonomy and AI goals, continue to fall.
Adjusted earnings dropped 16 per cent in late 2025, with net income plunging 61 per cent quarterly and 46 per cent yearly—a $3.3 billion loss from peaks. Deliveries hit record quarterly and annual declines, versus prior 50 per cent growth. Profits shrank in nine of ten recent quarters, reaching just 30 per cent of 2022’s $12.6 billion high.
Reputation suffered last year from backlash to Musk’s politics and Trump ties among some U.S. and European buyers. U.S. EV demand waned after a $7,500 tax credit ended, while BYD overtook Tesla as global EV leader.
These models represent only 3 per cent of sales, limiting impact as production ends next quarter.
Robotaxi and robotics hype lifted shares to a December record before a pullback. Stock rose after-hours on plans to expand robotaxi service to seven markets by mid-year from two.
Musk reiterated goals for half the U.S. population by late 2025, adding a quarter to half of the United States will have fully autonomous vehicles by end-2026, “pending regulatory approval.”