Tesla has announced it will stop producing its premium Model S sedan and Model X SUV by mid-2026. These two cars have long been the company’s flagship models, but sales have been falling steadily. CEO Elon Musk revealed the decision during Tesla’s fourth-quarter earnings call on 28 January 2026, describing it as an “honorable discharge” for the vehicles that helped define Tesla’s luxury lineup.
Musk explained that the move is part of a larger plan to focus on robotics, AI, and autonomous driving technology. He encouraged anyone interested in the Model S or X to place orders before production ends, noting that current inventory will be the final units.
Tesla’s Fremont factory in California will be reconfigured to manufacture the company’s Optimus humanoid robots, with a goal of eventually producing up to one million units annually. This shift underscores Musk’s vision of transforming Tesla from a traditional carmaker into a technology-driven company with a focus on automation and AI.
The Model S and X have seen declining sales over the past few years, contributing only a small portion of Tesla’s total vehicle deliveries. In contrast, the Model 3 and Model Y remain the company’s top-selling vehicles, driving most of Tesla’s revenue.
Tesla also reported its first annual revenue decline, with 2025 sales dropping about 3% to $94.8 billion, marking a rare slowdown after years of consistent growth. Despite this, Musk emphasized Tesla’s commitment to developing self-driving technology, AI-powered hardware, and robotics, including the Optimus project.
While new Model S and X cars will no longer be produced, the company will continue to support existing owners with service and maintenance. This decision reflects Tesla’s strategic realignment, focusing on high-volume models like the Model 3, Model Y, and the upcoming Cybertruck, while expanding into emerging tech sectors.
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