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Change Announced By Elon Musk Aims To End Two Historic Models And Reorient The Fremont Factory. Company Focuses On Robotics And Artificial Intelligence, While Investors Watch Delivery Numbers, Investments, And Operational Impacts Of The New Industrial Plan.
The Tesla announced that it will cease production of the Model S and Model X and redirect the capacity of the Fremont factory in California towards the humanoid robot project Optimus.
Elon Musk presented the change during the fourth quarter earnings call, describing a reorganization of the company’s priorities towards areas related to artificial intelligence and robotics.
According to the timeline mentioned by Musk, the company plans to reduce production of the two models in the next quarter and then cease production.
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In the same conversation with investors, the executive stated that the area currently dedicated to the S and X in Fremont will be used for a line focused on Optimus, with an annual capacity target of 1 million units.
Change At The Fremont Factory And Industrial Adaptation
The Fremont plant has been associated with Tesla vehicle manufacturing for years and is now expected to undergo adaptation for a product different from the automotive portfolio.
Musk did not detail, during the earnings call, the specific size of the investment for the factory conversion, nor did he present a technical timeline for the implementation of the new line at that time.
When discussing the end of the S and X models, Musk said: “We expect to wind down S and X production next quarter and basically stop production of Model S and X next quarter”.
This statement was made as part of the explanation regarding the reorganization of the industrial capacity of the unit.
There was also no comprehensive overview of the job impacts directly related to the transition during the presentation.
Nevertheless, the company indicated that it is expanding investment fronts in infrastructure and new projects, in the context of increasing capital expenditures.
According to Reuters, Tesla signaled to investors a capex projection above US$ 20 billion in 2026.
Why Model S And Model X Are Leaving The Production Line
The Model S, launched in 2012, and the Model X, from 2015, paved the way for Tesla in the high-priced electric segment and were part of the brand’s consolidation in that market.
In explaining the decision, Musk described the discontinuation as a “honorable farewell” to the models and linked the move to the need to concentrate efforts on projects that he believes have greater potential for scale in the company’s industrial plan.
The numbers released by the company reinforce the loss of market share for this category in the total delivery volume.
Tesla does not officially separate, in public reports, how many units correspond to each model within the group that includes “other models”.
Nevertheless, in the fourth quarter delivery consensus report, the company stated that “all other models” totaled 57,393 units for the year, while Model 3 and Model Y totaled 1,583,359, out of 1,640,752 deliveries in the period.
With this division, the category that includes S and X appears as a small portion of the annual total.
Since the company does not detail the composition of the group, it is not possible to state, based solely on official data, the exact share of each of the two models in the final number.
Tesla’s Balance Sheet And Messages To The Market
The change was communicated alongside the quarterly balance sheet and the discussion about annual performance.
According to Reuters, Tesla reported a 3% decrease in revenue in 2025 and also announced an investment of US$ 2 billion in xAI, an artificial intelligence company associated with Musk, signaling integration between the executive’s ecosystem projects.
In these types of earnings calls, analysts often look for signs about margins, growth rate, and delivery predictability.
In this context, the ending of S and X was presented as part of a portfolio reorganization, focusing on larger-scale products and initiatives outside the traditional automobile, such as robotics and autonomy systems.
Optimus Gains Space And A Goal Of 1 Million Units
The main practical effect announced for Fremont is the replacement of premium vehicle production with a line dedicated to Optimus.
Musk stated that the company is working towards an annual capacity goal of 1 million robots, without detailing at that time what stage the line is at or what steps precede production at that volume.
Tesla also did not present, during the earnings release, a complete public calendar with launch milestones, production commencement, or commercialization of Optimus.
What was communicated is that the factory, previously dedicated to the S and X models, should be prepared to meet the new priority.
In the meantime, the company continues with other initiatives related to autonomy and new products, mentioned by the company in presentations to investors.
The strategy described to the market combines software, automation, and hardware projects, with adjustments in the use of industrial capacity across different plants.
What Is Not Yet Clearly Documented
Despite the announced goals for Optimus, some information circulating about the project does not appear confirmed, in a verifiable way, in the publicly available sections of the conference call and in the consulted materials.
Among the points that are not clearly documented are details about the version, final design, specific presentation dates, and the large-scale production calendar.
With the planned discontinuation of Model S and Model X, Tesla maintains the volume focus on Model 3 and Model Y and signals that Fremont should become a hub for a product outside the traditional vehicle line.
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