Very unexpected news came from Tesla – the company that has become the most valuable and one of the world’s largest manufacturers of electric cars, will drop two of its four models. Namely, no matter how unusual it was, it was indeed confirmed: Models S and X will no longer be produced from the next quarter, so only Models 3 and Y will remain in the offer, which are already significantly better sold.
Goodbye cars, robots are coming
Shutting down the production of half of the range (from the range that could easily be represented by the acronym S3XY) is a consequence of the company’s change of focus, which will now dedicate its development and production capacities to humanoid robots. “Whether you want a Model S or X, now is the time to order,” said Musk’s company.
The announcement about shutting down the production of globally famous cars in favor of the production of as yet unproven robot technology came at the same time as the company’s latest business results. They say that their plan is to introduce the third generation of Optimus during the first quarter of this year (so, probably as early as next month), and it will be a robot design ready for mass production. The start of production is planned by the end of the year, and eventually the capacity will be one million robots per year at the factory in Fremont, California.
It is a continuation of the plan, they say, started in 2025, according to which Tesla will move from the hardware business to a company dealing with physical artificial intelligence. Few people were not surprised by this announcement, but still – from Elon Musk we could have expected a radical move like this. Such decisions brought him to where he is, on the untouchable first place in the ranking of the richest people in the world. Whether shutting down car production in favor of humanoid robots will increase its lead, or whether it will turn out to be a big flop – will ultimately be decided by the market. The first reactions from the stock market were positive, so the Tesla share gained in value by about 2% in the hours after the announcement of the financial results and this big decision.
Financial results
Although it achieved results above analysts’ estimates in the fourth quarter of 2025, Tesla closed the year with the first historical drop in total annual revenue of 3%. Their revenue fell to $94.8 billion compared to $97.7 billion the previous year. Despite this negative trend, shares gained in after-hours trading, primarily because the quarterly numbers still beat conservative analysts’ estimates.
Total revenues for the last three months reached $24.9 billion, slightly above the estimated $24.79 billion. Still, a deeper analysis shows that revenue in the auto segment fell 11% in the most recent quarter, from $19.8 billion to $17.7 billion, indicating a serious slowdown in the company’s core business — a consequence of Musk’s political involvement as well as growing competition.
Sales figures also show how popular each model is in Tesla’s portfolio: last year they delivered 1,585,279 Model 3s and Ys, and only 50,850 of the “other” models, which include the S, X and Cybertruck. In the last quarter, 406,585 Model 3s and Ys and 11,642 “others” were delivered.
Operating margins also declined, slipping from last year’s 6.2 percent to 5.7 percent. This suggests that the price cut policy that Tesla has tried to stimulate demand is taking a toll on overall profitability. The new strategic shift towards “physical artificial intelligence”, however, should create new sources of high-margin revenue in the long term. In addition, it was announced that Tesla will invest two billion dollars in Musk’s startup xAI, in order to develop software for Optimus with it.