Tesla is halting production of its Model S and X vehicles and repurposing its Fremont, California factory to manufacture humanoid robots named Optimus. Elon Musk announced this during a conference call discussing the fourth-quarter results, as reported by CNBC.
“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,” he stated.
After the original Roadster, these two models are the oldest in Tesla's lineup. Sales of the Model S began in 2012, followed by the Model X three years later.
Recently, the company has significantly reduced prices on new models amid increasing global competition in the electric vehicle sector.
The starting price for the Model S is $95,000, while the Model X starts at $100,000. The more affordable versions of the Model 3 and Model Y, set to launch in late 2025, will cost around $37,000 and $40,000, respectively. The Model 3 accounted for 97% of the 1.59 million vehicles sold by the company.
In its earnings report, Tesla reported its first annual revenue decline in history, with sales dropping in three of the last four quarters. In light of this, Musk aims to shift investor focus to autonomous vehicles and robots—areas where the company is not yet active.
Optimus is a bipedal robot that is said to be capable of performing various tasks, from factory work to childcare. The company plans to unveil the third generation of the robot, intended for mass production, in the first quarter of 2026.
Musk mentioned that the assembly line in Fremont will be capable of producing 1 million Optimus units per year.
“This is a completely new supply chain. Optimus really has [no components from cars],” the entrepreneur noted.
The initiative also includes plans to increase the workforce and achieve a “significant increase in production volume.”
Investment in xAI
Alongside its earnings report, Tesla announced a $2 billion investment in another of Musk's companies—xAI.
The deal was part of a $20 billion funding round announced earlier in January.
“The investments were made on market terms agreed upon with other investors,” the company stated in its fourth-quarter earnings report.
xAI is a leading AI startup behind the chatbot Grok. Recently, it has come under scrutiny from regulators worldwide due to a scandal involving the generation and publication of explicit deepfake images based on real people's photographs.
Tesla is incorporating Grok as a feature in some of its electric vehicle infotainment systems. In a new presentation for shareholders, company representatives stated that the firms have entered into a framework agreement to explore potential collaboration in AI.
It’s worth noting that in January, Musk claimed that artificial intelligence could surpass human capabilities as early as 2026.