Tesla is finally doing what many longtime fans hoped it would never do, cutting off its flagship Model S sedan and Model X SUV just as its profits are sliding. The move strips out the cars that made electric vehicles aspirational and folds their factory space into a very different bet on robots and artificial intelligence. It is a clean break with Tesla’s first generation of products, and it lands at the exact moment the company’s financial aura has started to crack.
I see this as more than a product decision. It is a statement about where Tesla thinks the next decade of growth will come from, and how aggressively it is willing to walk away from the halo cars that built its brand in order to chase that future.
The end of an era for Tesla’s original flagships
On the company’s latest earnings call, CEO Elon Musk told investors that Tesla will stop building the Model S and Model X in the second quarter, effectively putting an expiration date on the sedan and SUV that defined its early success, a shift detailed in WardsAuto. A separate breakdown of that call notes that Tesla is ending Model S and X production in Q2 under the direct guidance of CEO Elon Musk, who framed the decision as part of a broader pivot away from a traditional SUV and sedan lineup, as captured in a second WardsAuto report. For buyers, the practical cutoff is even clearer: detailed coverage of the retail plan says the Tesla Model S and Model X are in their final year and that the factory space they occupy will be repurposed, confirming that the Tesla Model S and X are “Are In Their Final Year” as part of a shrinking lineup described by CarsDirect.
What makes this different from a normal product sunset is that Tesla is not planning direct successors. Reporting on the decision notes bluntly that the Model S and Model X will not be replaced and that production capacity will instead be redirected, a point laid out in Key Points. Another account of the call underscores that, on Tesla’s fourth quarter discussion with analysts, CEO Elon Musk said the company is ending production of its Model S and Model X vehicles and tied that to a broader strategy after an annual sales decline, as summarized in On Tesla. For anyone who watched these cars drag the luxury market into the electric age, it feels like Tesla is closing the book on its original identity in order to write a new one.
Profits slide, robots rise
The timing of this move is not accidental, it is financial triage. Tesla’s own Q4 2025 update shows the pressure building, with a section labeled Highlights leading into a detailed Financial Summary and Operational Summary that spell out weaker margins and a need to rethink capital spending, all laid out in the company’s Highlights. Independent coverage of those numbers is even starker, noting that Tesla profits slumped 46% last year as it lost its crown as the top EV seller, and that as part of that pivot the company is discontinuing its higher end Model S and Model X vehicles that were already built in much smaller volumes at Tesla’s Fremont factory, a link made explicit in Tesla profits. Another analysis of the same slump notes that revenue and profit tumbled enough to knock Tesla off its pedestal and that CEO Elon Musk is now leaning on projects like Optimus that he believes could eventually be worth more than all Tesla’s other vehicles combined, a claim highlighted in a piece by Chris Isidore.
That is where the robots come in. Multiple reports say Tesla is killing the Model S and X in favor of building robots, with the company planning to end production of its Model S and Model X vehicles so it can expand manufacturing of its Optimus humanoid robots and related AI compute clusters, a tradeoff spelled out in coverage of how Tesla plans to retool. Another summary of the strategy puts it even more bluntly, saying Tesla is killing the Model S and X in favor of building robots and tying that to a broader shift in how the company allocates its Manufacturing and Hardware resources, a theme that also runs through the Operational Summary and Manufacturing & Hardware sections of Tesla’s own Q4 deck at Manufacturing. From my vantage point, this is Tesla betting that its future margins will come less from selling premium EVs and more from selling autonomy as a service, whether that is in cars, factories or humanoid machines.
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