Elon Musk stated: “It’s time to end the Model S and X programs,” making this announcement during a conference call with investors.
According to him, production of the Model X crossover and Model S sedan will be halted in the next quarter.
The factory in Fremont, California, where these models were previously produced, will be repurposed for the production of humanoid robots called Optimus.
Additionally, Musk reported a 3% decline in the company’s total revenue in 2025 and a 61% drop in profit over the last three months.
Earlier this year, the Chinese company BYD surpassed Tesla, becoming the largest electric vehicle manufacturer in the world.
Musk's political activity has also negatively impacted Tesla's customer base, leading to protests at dealerships in various countries.
Tesla's decision to shift focus away from electric vehicles coincided with initiatives by U.S. President Donald Trump to cut government programs supporting environmentally friendly vehicles.
The brand, which was once one of the leaders in profitability among automakers, is now actively developing the robotaxi sector.
During the investor meeting, Musk also announced a $2 billion investment in his AI startup xAI.
“Numerous investors asked us for this,” he noted, explaining Tesla's participation in the latest funding round for xAI. “We are simply following the requests of our shareholders.”
This decision was made despite the fact that in the previous shareholder vote, the majority abstained or voted against this idea.
Last year, shareholders unanimously approved a record compensation package for Musk, which cost nearly $1 trillion, contingent on a sharp increase in the company’s market capitalization over 10 years.
Musk stated that Tesla plans to significantly increase its expenditures—by about $20 billion.
“Next year, we are expecting major capital expenditures. We are making significant investments for a bright future,” he added.
The company's shares rose by 2% in after-hours trading in response to this news.
Analysts believe that the company's shift in focus is occurring against the backdrop of its aging lineup of electric vehicles.
“The Model S and Model X have long become low-volume models for Tesla,” noted Jessica Caldwell, head of the Edmunds analytics department, in an interview with the BBC.
“From a portfolio logic perspective, it makes sense to abandon these models and focus on more mass-market products like the Model 3 and Model Y, as well as to develop other business directions,” she added.
