During Tesla’s 2025 fiscal year earnings call, CEO Elon Musk announced that the company will “basically stop production” of its flagship Model S and Model X vehicles next quarter. Characterizing the move as an “honourable discharge,” Musk explained that Tesla is pivoting away from traditional premium EVs to prioritize an autonomous and robotic future. While the company will support existing vehicles indefinitely, no new units will be manufactured once current inventory is exhausted.
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The production lines currently dedicated to the S and X at Tesla’s Fremont factory will be overhauled for a new purpose: the mass production of the Optimus humanoid robot.
- The Goal: Musk aims to eventually produce 1 million Optimus robots within that reclaimed space.
- Public Launch: At the recent World Economic Forum in Davos, Musk slated the public sale of Optimus for late 2027.
- The Hype: Musk maintains that Optimus will become the “biggest product of all time,” though sceptics point to Tesla’s history of missed timelines and underwhelming hardware demonstrations.
The retirement of these models marks the end of a long run—the Model S debuted in 2012 and the Model X in 2015. However, their market dominance has plummeted in favour of Tesla’s more affordable offerings. In 2025, the Model 3 and Model Y accounted for the vast majority of deliveries (1,585,279 units), while the S and X combined for just 418,227. Furthermore, trade tensions and Chinese tariffs on US-made imports forced Tesla to halt S and X sales in China mid-2025, further weakening the business case for the aging platforms.
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The earnings report also shed light on Tesla’s deepening ties with Musk’s other ventures and his unprecedented compensation:
- xAI Funding: Tesla has invested $2 billion in Musk’s artificial intelligence startup, xAI. This comes despite a 2024 shareholder lawsuit alleging that xAI competes directly with Tesla’s own AI ambitions.
- The $1 Trillion Payday: In late 2025, shareholders approved a massive $1 trillion pay package for Musk. The catch? To collect, he must lead Tesla to a staggering market valuation of $8.5 trillion.
