Tesla Discontinues Model S/X - $20B Bet on Humanoid Robots

At the just-concluded FY2025 Q4 earnings call, Tesla CEO Elon Musk dropped a bombshell: Tesla will officially discontinue the Model S and Model X that once defined its brand positioning. The historic Fremont, California factory will undergo a complete transformation into an Optimus humanoid robot mega-production facility.

This isn't just a simple discontinuation—it's a complete resource reallocation. As Musk updates the company's mission to "Amazing Abundance," Tesla is attempting to push human society into a new era driven by robotic labor through a projected annual CapEx plan exceeding $20 billion.

Flagship Models "Honorably Retired" - Musk's New Decade Mission

After more than a decade of leadership, Model S and Model X will reach their "honorable retirement."

Musk announced at the call that production of both models will cease globally in 2026, with the vacant capacity at Fremont immediately repurposed for mass production of Optimus humanoid robots.

Despite S/X once being the benchmark for luxury EVs, their global deliveries in 2025 have shrunk to approximately 30,000 units, far below Fremont's annual capacity of 100,000 units. In contrast, Optimus is viewed by Musk as Tesla's "greatest product" in history, with importance surpassing even electric vehicles and FSD autonomous driving technology.

Tesla's goal is to achieve annual production of 1 million units by 2027, while driving down per-unit production costs to around $20,000.

Source: Tesla

One of the most notable changes at the earnings call was Tesla's mission statement evolution, transitioning from "accelerate the world's transition to sustainable energy" to "building a world of amazing abundance."

Musk painted a vision of a future society where robots provide cheap, efficient labor. He believes that when productivity costs approach zero due to Optimus proliferation, humanity will enter an era of "universal high income."

To achieve this goal, Tesla's 2026 CapEx will more than double to over $20 billion, funding construction of six new factories including "dedicated robot manufacturing facilities," while massively expanding AI compute infrastructure centered on the Cortex supercomputer.

No Chips, Just a Mannequin

To address geopolitical risks and supply chain bottlenecks, Musk once again emphasized the highly ambitious "TeraFab" 2nm wafer fab plan.

"Without AI chips, Optimus is just a human-shaped mannequin," Musk stated bluntly. Tesla plans to build a mega-factory on U.S. soil integrating logic chip design, memory production, and advanced packaging capabilities, with target capacity starting at 100,000 wafers per month and eventually scaling to 1 million wafers monthly.

Source: Tesla

Musk noted that existing suppliers like TSMC and Samsung require five years to build new fabs, which he considers "five years might as well be forever." Complete vertical integration from base materials to core silicon processing is Tesla's key moat differentiating it from traditional automakers and pure algorithm companies.

Just before this earnings call, the U.S. domestic humanoid robotics industry is experiencing collective emergence. Among them, Boston Dynamics just unveiled the commercial version of its all-electric Atlas robot at CES 2026, whose hydraulic-to-electric conversion delivers ultimate agility that remains the industry benchmark.

Figure AI just released the Helix02 system demonstrating full-body autonomous control from "pixels to torque," accomplishing complex mobile manipulation tasks at BMW factories.

1X Technologies, with its 1X World Model, has enabled robot Neo to perform household tasks through video learning, gradually penetrating the home market.

$20 Billion "Painful Ramp"

Despite the grand vision, Musk also acknowledged that Optimus's supply chain ecosystem "virtually doesn't exist" and must be redesigned from first principles physics. He warned that Optimus's production ramp curve will be even more "painfully slow" than Cybertruck.

From a financial perspective, industry forecasts suggest Tesla may face its first negative free cash flow risk since 2018 in 2026. Against a backdrop of declining traditional EV business revenue, whether such massive capital investment can deliver successful mass production and commercialization of Optimus Gen 3 will determine the success or failure of Tesla's "all-in transformation." Tesla plans to officially unveil Gen 3 in Q1 2026 and commence production by year-end.

Tesla's discontinuation of Model S/X marks the end of one era and the beginning of another. Musk's bet on "physical AI" rather than traditional hardware, as multiple media outlets have commented, signals Tesla's transformation from an electric vehicle manufacturer into a tech company centered on autonomous driving, AI, and humanoid robots.

In the coming months, global attention will focus on the upcoming Optimus Gen 3. It carries not only Tesla's future but also Musk's entire vision for a world of "amazing abundance."