Elon Musk says Tesla ending Models S and X production as Tesla reports its first annual revenue decline on record
According to CNBC, Tesla CEO Elon Musk said that the electric vehicle (EV) manufacturer has ended the production of Model S and Model X, calling it an “honorable dismissal” and urging vehicle fans to order immediately before stocks run out.
Speaking at the auto industry’s fourth-quarter earnings call on January 28, the world’s richest man said the company will instead use the factory in Fremont (California, USA) to build their humanoid robot Optimus.
“It’s basically time to end the Model S and X programs with an honorable discharge. If you’re interested in purchasing a Model S and X, now is the time to order,” the billionaire said.
Tesla’s Model S, Model X – Why was it discontinued?
Priced around $95,000 and $1,00,000 respectively for the base variants, the Model S (2012) and
In recent years, Tesla has reduced car prices due to increasing global competition in the EV market. But the bulk of the company’s sales come from the Model 3 (base $37,000) and Model Y (base $40,000), which together account for 97% or 1.59 million deliveries in 2025.
According to a Reuters report, Tesla saw its first annual decline in top-line revenue – falling nearly 3% to about $94.83 billion in 2025. Adjusted earnings of 50 cents per share in the fourth quarter beat Wall Street’s target of 45 cents, according to LSEG data. It was stated that net income decreased by 61% in the quarter to $840 million.
According to Visible Alpha data, the company is expected to deliver 1.77 million vehicles in 2026, an increase of 8.2%.
Are Tesla’s Optimus humanoid robots gaining the company’s focus?
Notably, the CNBC report noted that Tesla is focusing on self-driving cars and humanoid robots as the future; There are currently almost no jobs or profits in either field. The company added that it envisions Optimus appearing in both homes and factories and plans to unveil the third-generation design “intended for mass production” this quarter.
Talking about plans for Optimus on the earnings call, Elon Musk said Tesla would replace its Model S and X production lines with Optimus instead and target “1 million units per year.”
“Because it’s a completely new supply chain, there’s really nothing from the existing supply chain at Optimus. We’ll be increasing staffing at the Fremont facility and significantly increasing production,” he added.
Elon Musk: Tesla needs to build a factory for its own chips
Additionally, a Bloomberg report stated that Elon Musk wants Tesla to build and operate what he calls “TeraFab” to produce semiconductors. “We’re going to have to build a very large factory, the Tesla TeraFab, that includes logic, memory, and packaging domestically to eliminate the potential constraint within three or four years,” he said during the earnings call.
Tesla, the world’s most valuable automobile manufacturer, has invested its future in artificial intelligence (AI), autonomous driving and robot technology, and projects with an insatiable need for chips. The company currently supplies the chips to Micron Technology Inc., Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. (TSMC).
“This will be very important to ensure that we are protected against geopolitical risks. I think people may be underestimating some of the geopolitical risks that will be a significant factor in a few years,” he added.
