After more than a decade, Tesla's flagship sedans are being discontinued by Q2 2026. The Fremont factory will be converted to Optimus robot production.
Elon Musk's vision has shifted decisively toward autonomy and robotics
"This is part of our overall shift to an autonomous future."
Musk has publicly referred to Model S and X as "sentimental vehicles" since 2019, signaling their eventual sunset even as they continued production.
Both models are built on platforms that are now over 10 years old—ancient in EV terms—making updates increasingly difficult and costly.
Tesla is converting the Fremont S/X line to manufacture Optimus humanoid robots—a market Musk believes could dwarf vehicle sales.
Higher margins don't always mean better business economics
Premium Flagship Vehicles
Profit per vehicle
Mass Market Vehicles
Profit per vehicle
The Fremont S/X line is running at just 30% capacity—producing only ~30,000 units annually when it's built to handle 100,000+. This catastrophic underutilization crushes operating economics regardless of per-unit margins.
Model S & X represent a shrinking fraction of Tesla's business
Still holding relatively steady, but cracks appearing
A 41% drop year-over-year signals serious trouble
On track for another significant decline before discontinuation
Investors and analysts weigh in on the decision
Lowered price target from $425 → $415 following the announcement, citing uncertainty around production transitions.
"It's a mistake to keep Cybertruck (negative brand equity, 10k units) and kill S/X (strong loyalty, 30k units, highly profitable)."
A leaner lineup focused on autonomy and scale
Tesla's business model is shifting from selling cars to operating autonomous vehicle fleets—a fundamental transformation of the company.
Musk has stated that "long-term, the only vehicles we'll make will be autonomous"—human-driven cars are a transitional product.
"Long-term, the only vehicles we'll make will be autonomous."