August M
Tesla has made its clearest move yet away from its traditional car business, signalling a major change in direction for the company’s future.
The announcement came as the electric vehicle maker reported falling revenues, even as investor enthusiasm was buoyed by ambitious promises around artificial intelligence and robotics.
According to The Guardian, Tesla will discontinue its Model S and Model X vehicles as CEO Elon Musk pushes the company toward robotics.
End of an era
Musk told investors on Wednesday that Tesla would wind down production of its Model S sedan and Model X SUV.
“It’s time to basically bring the Model S and X programs to an end,” Musk said. “We expect to wind down S and X production next quarter.”
He said the Fremont, California factory that produces the two models would be converted to manufacture Tesla’s Optimus humanoid robot.
Robots over cars
Tesla’s latest earnings report described the past year as a transition “from a hardware-centric business to a physical AI company”.
While Tesla posted its first-ever year-on-year revenue decline of 3%, optimism around robotics helped it beat Wall Street expectations. The company reported fourth-quarter earnings per share of $0.50, above forecasts of $0.45, and revenue of $24.9bn, slightly ahead of estimates, according to The Guardian.
Tesla’s automotive revenues fell 11% in 2025, and vehicle deliveries declined 16% year-on-year, with particularly weak demand in Europe.
Big promises ahead
Musk has repeatedly said Optimus could become the “biggest product of all time”, claiming robots and autonomous vehicles could create “a world where there is no poverty”.
Tesla plans to begin Optimus production before the end of 2026 and sell the robot to the public in 2027. The company also disclosed a $2bn investment in xAI, Musk’s artificial intelligence firm.
Chief financial officer Vaibhav Taneja said Tesla expects capital expenditure of about $20bn, far higher than many analysts had predicted.
Mixed results
Tesla’s stock rose in after-hours trading following the earnings report. Shares had rebounded late last year after falling during Musk’s time in government, driven by enthusiasm for AI investments.
Not all of Tesla’s recent products have performed well. The Cybertruck saw a 48% drop in sales last year, according to Kelley Blue Book, despite Musk calling it “the best vehicle Tesla has ever made”.
Tesla is also facing growing competition from China’s BYD, which overtook Tesla as the world’s largest electric carmaker last year after increasing sales by 28%.
Sources: The Guardian
