Sarah Chen
The End of an Era: Tesla Says Goodbye to Its Flagship Vehicles
Let me break this down: imagine Apple announcing they're stopping iPhone production to focus on robots. That's exactly what Tesla just did.
On January 28, 2026, during the Q4 2025 earnings call, Elon Musk dropped the bombshell: Tesla will stop producing the Model S and Model X in the second quarter of this year. The vehicles that literally revolutionized the electric automotive industry will receive what Musk called an "honorable discharge."
"It's time to basically bring the Model S and X programs to an end with an honorable discharge. It's slightly sad, but it is time to move to an autonomous future." -- Elon Musk, Q4 2025 Earnings Call
But what most guides won't tell you is why they're really doing this and what it means for Tesla's future.
Why Is Tesla Killing Its Most Successful Children?
The trick is in the numbers. The Model S and Model X, despite their iconic status, represented only 2.78% of Tesla's deliveries in Q4 2025. Out of 418,227 vehicles delivered, barely 11,600 were these premium models.
But that's not all. Here's where it gets interesting:
| Metric | Model S/X | Model 3/Y |
|---|---|---|
| Q4 2025 Deliveries | ~11,600 | ~406,000 |
| Percentage of total | 2.78% | 97.22% |
| Average price | $90,000+ | $40,000-55,000 |
| Profit margin | High but low volume | Lower but massive |
Musk was direct: "If you're interested in buying a Model S or X, now would be the time to order it."
The Model S: The Car That Changed Everything
Before we talk about the future, let's honor the past. The Model S wasn't just an electric car. It was the car that proved EVs could be desirable.
Model S History:
- Launch: June 2012
- First deliveries: 2,650 units in its first year
- Current range: 410 miles (660 km) after the latest facelift
- 0-60 mph: 1.99 seconds in the Plaid version
- Maximum power: 1,020 horsepower
Think of it like this: in 2012, if someone told you an electric sedan could hit 60 mph in under 2 seconds, you would have laughed. The Model S made the entire industry take electric vehicles seriously.
The Model X: The SUV with Wings
Then came the Model X in 2015, with its iconic Falcon Wing doors that looked straight out of a sci-fi movie.
What Made the Model X Special:
- First SUV to earn 5 stars in all NHTSA safety categories
- Capacity for 7 passengers
- Doors that opened automatically detecting obstacles
- 352 miles of range in the Long Range version
It was the car that proved a family vehicle could be practical, safe, and absurdly fast at the same time.
So What Now? Robots. Lots of Robots.
This is where the story gets futuristic. Tesla isn't killing the Model S and X to make more Model 3s. They're killing them to manufacture one million humanoid robots per year.
Yes, you read that right. One million robots.
What Is Optimus?
Optimus is Tesla's humanoid robot. Think of it like a tireless worker that can handle tasks that are "dangerous, repetitive, or boring" that humans don't want to do.
Optimus Gen 3 Specifications (2026):
| Feature | Detail |
|---|---|
| Height | 1.73 meters (5'8") |
| Weight | ~57-59 kg (125-130 lbs) |
| Degrees of freedom (hands) | 22 (vs 11 in Gen 2) |
| Carrying capacity | 20 kg walking, 68 kg lifting |
| Battery life | ~20 hours |
| Cameras | 8 cameras, 576 megapixels/second |
| Possible tasks | 3,000+ |
What It Can Already Do
We're not talking about a clumsy prototype. Optimus can already:
- Stir pots and cook
- Sweep and vacuum
- Open and close cabinets
- Take out garbage bags
- Handle car components
- Sort objects by color
- Hold yoga poses (yes, really)
- Handle eggs without breaking them
Tesla's Plan: From Cars to Robot Army
Musk isn't joking about the numbers:
| Year | Production Goal | Location |
|---|---|---|
| 2026 (end of year) | Thousands of units | Fremont |
| 2026 (capacity) | 1 million/year | Fremont |
| 2027 | 10 million/year | Giga Texas |
The target price? Between $20,000 and $30,000 per robot. Compare that to Boston Dynamics' Atlas at over $140,000, or Figure 02 exceeding $100,000.
The Fremont Factory: From NUMMI to Robots
The Fremont factory has a fascinating history:
- 1984-2010: GM and Toyota joint venture (NUMMI)
- 2010: Tesla purchases the abandoned factory for $42 million
- 2012: Model S production begins
- 2015: Model X added
- 2023: Produces 560,000 vehicles per year
- 2026: Transition to Optimus robots
What Happens to the 20,000 Employees?
Here's the good news: no layoffs are planned. Musk stated they expect to hire more workers, not fewer. Employees will be retrained for the robot production line.
This contrasts sharply with Amazon laying off 16,000 people to invest in AI. Tesla, at least for now, promises growth.
The Context: Tesla Loses the Crown
But it's not all rosy. The announcement comes at a delicate moment for Tesla:
Q4 2025 Results:
- Revenue: $24.9 billion (slightly above estimates)
- Profits fell 61% year-over-year
- First annual revenue decline in Tesla's history (-3%)
The biggest blow: BYD overtook Tesla as the global EV sales leader in 2025:
| Metric | Tesla | BYD |
|---|---|---|
| EVs sold 2025 | 1.64 million | 2.26 million |
| Global position | #2 | #1 |
| Europe growth | -39% | +240% |
The Controversy: $2 Billion for xAI
The same day it announced the end of Model S/X, Tesla also revealed it will invest $2 billion in xAI, Musk's AI company that develops Grok.
The problem: xAI is under investigation by the European Union, California, Australia, and India over the deepfake scandal. Using Tesla shareholders' money to fund another Musk company has drawn criticism.
Is This the End of Tesla as We Know It?
What most guides won't tell you is that Tesla has been preparing for this moment for years. Musk has repeatedly said that cars are "secondary" compared to the potential of robotics and autonomy.
His own words:
"We're really moving into a future that is based on autonomy." -- Elon Musk
What Tesla sees in its future:
- Robotaxis (Cybercab) expanding to 7 markets in 2026
- 1 million Optimus robots per year
- Energy and storage (the only segment that grew 25%)
- AI integrated into vehicles via Grok
The Competition: Boston Dynamics Isn't Sleeping
Tesla won't be alone in the humanoid robot market:
| Robot | Company | Price | Advantage |
|---|---|---|---|
| Optimus Gen 3 | Tesla | $20-30K | Scale and price |
| Atlas | Boston Dynamics | $140K+ | Extreme agility |
| Figure 02 | Figure AI | $100K+ | Rapid development |
| Digit | Agility Robotics | $100K+ | Industrial application |
Boston Dynamics (owned by Hyundai) already announced capacity for 30,000 Atlas robots per year. But Tesla is betting that volume and low price will win the race.
What Does This Mean for You?
If You're a Tesla Owner or Fan:
This is the last chance to buy a new Model S or X. Once inventory runs out, you're buying an instant classic.
If You're an Investor:
Tesla's bet is clear: robotics > cars. The market has already priced this in with a 309x EV/EBIT TTM valuation. It's a long-term bet, not short-term.
If You're Interested in Technology:
2026 will be the year humanoid robots move from demos to real factories. Both Tesla and Boston Dynamics are entering mass production.
Conclusion: The End of One Era, the Beginning of Another
The Model S and Model X changed the automotive industry forever. They proved that electric vehicles could be desirable, fast, and practical. They forced every manufacturer on the planet to take electrification seriously.
But Tesla no longer wants to be just a car company. It wants to be the company that builds the robot army that (according to Musk) will transform the global economy.
Will it work? Nobody knows. What we do know is that Tesla is willing to sacrifice its iconic vehicles to find out.
As Musk said: "It's slightly sad, but it is time to move to an autonomous future."
The question is whether that future will be as bright as Tesla promises.
Frequently Asked Questions
When will Tesla stop making the Model S and X?
In the second quarter of 2026 (April-June). Musk recommended ordering now if you want one.
How much will the Optimus robot cost?
The target is between $20,000 and $30,000, significantly less than competitors like Atlas ($140,000+).
What will happen to Fremont employees?
No layoffs are planned. Tesla says it will retrain workers and possibly hire more.
Why is Tesla doing this?
Model S/X represent only 2.78% of sales. Tesla sees more value in robotics and autonomy than in low-volume premium vehicles.
How many robots does Tesla plan to build?
1 million per year at Fremont by 2026, scaling to 10 million in 2027 from Giga Texas.
