Elon Musk's Announcement

During a call on January 28, 2026, Tesla CEO Elon Musk stated that the company is ending production of its Model S and X vehicles.

Musk mentioned that it's time for these models to conclude with what he called an "honorable discharge." He encouraged potential buyers to order these models while they are still available.

Transition to Robot Manufacturing

The Fremont factory in California will be converted to manufacture Optimus humanoid robots. Musk disclosed that the new line is designed to produce 1 million units per year.

He emphasized that this new production line will require a completely new supply chain, distinct from what was used for the Model S and X.

Impact on Tesla's Sales

Tesla's decision to phase out the Model S and X comes amid increased competition in the electric vehicle market.

The Model S was first sold in 2012, followed by the Model X in 2015. Over recent years, Tesla has cut prices on these models as competition has intensified.

In its 2025 earnings report, Tesla experienced its first annual revenue decline in history, with sales falling in three of the last four quarters.

The company revealed that its Model 3 and Model Y accounted for a staggering 97% of its total 1.59 million deliveries last year.

Future Plans for Optimus

Tesla aims to unveil the third generation of its Optimus robot in the first quarter of 2026.

This new version is intended for mass production and is part of Musk's vision for the company's future, which includes a shift away from traditional electric vehicles toward advanced robotics.

What’s Next for Tesla?

With the shift away from the Model S and X, Tesla plans to increase its workforce at the Fremont facility. Musk stated that this will lead to a significant increase in output, focusing on the development and production of the Optimus robots.

As Tesla pivots to this new venture, it will be interesting to see how this impacts the company's overall strategy and market position.