Tesla Kills the Cars That Built Its Empire

Tesla is pulling the plug on the vehicles that dragged the electric car into the mainstream. On Wednesday’s fourth-quarter earnings call, Elon Musk confirmed that production of the Model S and Model X will wrap up for good in the second quarter of 2026. It is a ruthless culling of legacy hardware, signaling that the world’s most valuable automaker is ready to set fire to its past to fuel a future built on silicon and robotics.

Musk framed the retirement of the two flagship models as an "honorable discharge." Since their debuts in 2012 and 2015, the S and X served as the high-performance battering rams that shattered the "golf cart" stigma of early EVs. But the prestige is fading. Tesla is staring down its first-ever annual revenue decline—a 3% slip in 2025—and the solution isn't a new sedan. Instead, Musk is betting the farm on the Optimus humanoid robot.

Gutting Fremont for a Million Robots

The transformation of the Fremont, California, factory is less of a renovation and more of a total teardown. Musk announced that the massive assembly lines currently churning out S and X chassis will be gutted to make room for a robotics manufacturing hub. The goal is staggering: a facility capable of pumping out 1 million Optimus units every year.

While the Model 3 and Model Y remain the company's bread and butter, the aging flagships have become footnotes. Vehicle deliveries fell 9% year-over-year in 2025, with high-end demand cratering as buyers shifted toward fresher alternatives. By dragging the S and X behind the shed, Tesla hopes to streamline its operations for what Musk calls the "biggest product of all time." The company is slated to unveil the third generation of Optimus later this quarter—a version supposedly designed for the brutal realities of mass production.

Reality Check: The Ghost of Production Hell

To any seasoned Tesla observer, the "1 million units" figure triggers immediate skepticism. Musk’s track record with manufacturing timelines is a graveyard of missed deadlines and "production hell." The Cybertruck arrived years late, and Full Self-Driving has been "six months away" for nearly a decade. Transitioning from the relatively predictable world of automotive stamping to the hyper-complex assembly of humanoid robots—machines requiring thousands of precision actuators and advanced neural nets—is a manufacturing moonshot that makes the Model 3 ramp-up look like a warm-up exercise.

The High-Stakes Gamble on Silicon Over Steel

This isn't just a product shift; it’s an identity crisis. Tesla is effectively trying to shed its skin as an OEM to emerge as a pure-play AI and robotics firm. The pressure is coming from all sides. In China, BYD’s aggressive expansion and the arrival of high-end disruptors like the Xiaomi SU7 have turned the premium EV market into a bloodbath. Domestically, the brand is fighting a cooling luxury market and a polarizing political reputation that has some traditional buyers looking toward Li Auto or European incumbents.

Tesla’s survival now hinges on a vision of an "autonomous economy." This strategy replaces car sales with a triad of Optimus robots, specialized AI, and a dedicated robotaxi fleet. Driverless taxi services are scheduled to go live in Houston, Miami, and five other metros within the next few months. Musk’s pitch to Wall Street is blunt: stop valuing Tesla on the number of steering wheels it sells and start valuing it on the near-free labor of a robotic workforce. He is banking on an "explosion in the global economy" driven by machines that never sleep and don't collect a paycheck.

The Final Countdown for the Flagships

For collectors and enthusiasts, the era of the luxury Tesla sedan is officially in its final act. "If you’re interested in buying a Model S and X, now would be the time to order it," Musk warned during the call. The company plans to maintain parts and software support for the existing fleet, but the focus has clearly shifted to the next frontier.

As the heavy machinery begins to move into Fremont, the burden of proof lies squarely on Musk’s shoulders. Tesla aims to begin internal robot production by the end of 2026, with public sales tentatively slated for 2027. It is the most audacious pivot in industrial history—a move that will either cement Tesla as the architect of the future or serve as a cautionary tale of what happens when a car company forgets how to be a car company.