Tesla (TSLA) has announced that it is ending production of its Model S and Model X electric vehicles (EVs) as the company’s sales continue to decline.
News that the Model S and X will be discontinued comes after Tesla reported that its annual revenue declined for the first time in the company’s history.
Going forward, Tesla will focus less on electric vehicles and shift to artificial intelligence (A.I.) and robotics, said management on an earnings call with analysts and media.
The company, which is run by Chief Executive Officer (CEO) Elon Musk, reported a 3% decline in its 2025 revenue, the first annual decrease for Tesla.
At the same time, Tesla’s profits plunged 61% year-over-year in the final quarter of last year. The poor results come as China's BYD has overtaken Tesla as the world's largest EV maker.
On the earnings call, Tesla’s management team said they will use the manufacturing plant in California that made the Model S and X vehicles to produce humanoid robots called Optimus.
Tesla is also pushing into self-driving cars, which it calls robotaxis.
The disappointing financial results and shift in priorities comes as Tesla’s brand and its electric vehicle sales have suffered a backlash due to Elon Musk's political involvement and views.
Many investors and analysts have also objected to a plan that will pay Musk $1 trillion U.S. if certain milestones at Tesla are reached in coming years.
Tesla’s sales in the U.S. have nosedived after the federal government ended a lucrative subsidy on electric vehicles that provided buyers of the cars with rebates of up to $7,000 U.S.
On the latest earnings call, Tesla’s management team revealed that the company has invested $2 billion U.S. in Musk's A.I. startup venture called xAI.
Shareholders of Tesla voted against a proposed xAI investment last year.
The company also announced a significant increase in spending this year, raising its capital expenditures by an estimated $20 billion U.S.
TSLA stock has risen 10% over the past year to trade at $430.46 U.S. per share.
Tech Insider
