Tesla is shifting production from its Model S and X vehicles to humanoid robots named Optimus, as announced by Elon Musk.
Tesla is transitioning its Fremont, California factory from producing Model S and X vehicles to manufacturing humanoid robots known as Optimus. This announcement was made by CEO Elon Musk during a conference call about the company's fourth-quarter financial results.
“It’s time to retire the Model S and X with dignity. If you’re interested in purchasing one, now is the time to place your order,” Musk remarked.
The Model S and X, which began sales in 2012 and 2015 respectively, are the oldest models in Tesla's current lineup, following the original Roadster. Amid fierce competition in the electric vehicle market, Tesla has recently lowered prices for its new models.
The Model S starts at $95,000, and the Model X at $100,000, while upcoming affordable versions of the Model 3 and Model Y are expected to launch in late 2025 at approximately $37,000 and $40,000. The Model 3 has been particularly successful, representing 97% of the 1.59 million vehicles sold by Tesla last year.
In its earnings report, Tesla revealed it experienced its first annual revenue decline, with sales decreasing in three of the last four quarters. Consequently, Musk is shifting focus to autonomous vehicles and robotics as new growth areas for the company.
Optimus is designed as a versatile bipedal robot capable of various tasks, including factory work and childcare. Tesla aims to introduce the third generation of Optimus, which will be mass-produced, in the first quarter of 2026, with plans for the Fremont facility to have an annual production capacity of 1 million units.
“This is a completely new supply chain. Optimus really has [no components from cars],” Musk explained.
The initiative is also set to expand the workforce and significantly boost production volume.
Investment in xAI
Alongside its financial disclosures, Tesla announced a $2 billion investment in xAI, another venture led by Musk. This investment is part of a broader $20 billion funding round disclosed earlier this month.
“The investments were made on market terms agreed upon with other investors,” Tesla stated in its earnings report.
xAI, known for the chatbot Grok, has recently faced scrutiny from global regulators due to issues related to explicit deepfake images. Tesla plans to integrate Grok into some of its vehicle infotainment systems and has established a framework agreement to explore AI collaboration with xAI.
Musk has previously suggested that AI could surpass human capabilities as soon as 2026.
