What just happened? Tesla's Fremont, California, factory – once home to the Model S and Model X – will soon build humanoid robots instead of cars. Elon Musk confirmed during Tesla's fiscal 2025 earnings call that production of the company's two oldest electric vehicles will "basically stop" next quarter, as engineers refit the facility for the Optimus program, Tesla's most ambitious robotics effort to date.
The decision ends a major chapter in Tesla's history. The Model S, introduced in 2012, and the Model X, launched in 2015, helped define the premium electric vehicle segment and positioned Tesla as a pioneer in modern automotive design.
Over time, however, sales of the higher-priced models fell sharply as the Model 3 and Model Y – Tesla's simpler, more affordable EVs – came to dominate production and deliveries. In 2025, Tesla sold just over 418,000 Model S and X vehicles, compared with more than 1.5 million Model 3 and Y units.
The decline was compounded by a trade dispute that halted Model S and X sales in China, their largest overseas market, due to retaliatory tariffs between Beijing and Washington. With global demand tapering and Tesla's strategic focus shifting toward artificial intelligence and automation, winding down the older product lines became increasingly inevitable.
Musk framed the move as a forward-looking transition rather than a retreat. He described the end of production as an "honorable discharge," stressing that Tesla will continue to support existing vehicles while redirecting resources toward autonomy.
The Fremont facility, once optimized for large-scale EV assembly, is now slated to become the manufacturing base for Musk's humanoid robot, Optimus. Tesla's long-term target is to produce as many as one million units at the site.
Credit: App Economy Insights
Optimus remains an early-stage technology. First unveiled in prototype form in 2022, the humanoid robot has been shown performing simple manual tasks, but live demonstrations have also exposed its limitations in mobility and dexterity.
Despite those shortcomings, Musk insists Optimus will eventually surpass the smartphone in market impact. Speaking at the World Economic Forum in Davos earlier this month, he reiterated that Tesla plans to begin selling the robot by the end of next year.
Tried to start a fight at the Tron: Ares premiere pic.twitter.com/TvWCOaXIlN
– Tesla Optimus (@Tesla_Optimus) October 7, 2025
For Musk, the pivot from EVs to autonomous hardware and humanoid robotics reflects what he has long described as Tesla's ultimate purpose: deploying artificial intelligence at massive industrial scale. Retiring the Model S and X clears legacy ground for that experiment to begin.