Tesla scraps Model S and Model X to build robots
By Chris Isidore, CNN
(CNN) — Tesla CEO Elon Musk, who turned an upstart electric vehicle maker into an industry-changing powerhouse, is pulling the plug on the two models that helped get him there, as he struggles with another quarter of declining profits and car sales.
He announced the end of production of two models – the Model S and Model X, among the company’s most expensive models, on a Wednesday earnings call. Instead, the company will use that factory space to build humanoid robots instead.
And he seemed to suggest that selling electric vehicles, which Tesla helped to introduce to the global mass market, would soon be an afterthought for the company.
Musk predicted the Cybercab, a two-seat self-driving “robotaxi” vehicle with no steering wheel or pedals, will eventually be sold in numbers “several times more” than all Tesla’s other vehicles combined.
But Tesla’s robotaxi service is still not in wide operation, using Tesla employees as “safety monitors” in the cars while other companies offer true driverless rides in far more cities. Meanwhile, the company’s EV sales and profits, which it still depends upon for the cash to fund its ambitious autonomous and AI future, continue to decline.
Tesla said Wednesday that its adjusted income fell 16% during the last three months of 2025. Its net income tumbled further, plunging 61% in the quarter and 46% for the year, or a $3.3 billion decline.
The company posted its biggest year-over-year sales volume drop ever in the fourth quarter and by far the biggest drop in annual sales at a company that at once been growing at nearly a 50% pace.
Tesla’s earning have fallen in nine of the last 10 quarters. As of 2025, the company’s annual income is only 30% of the $12.6 billion it was in 2022, its peak earnings year.
The brand’s reputation took a hit last year among some American and European buyers – backlash to Musk’s political activities and his close relationship with President Donald Trump. And all US EV sales dropped off later in the year following the elimination of a $7,500 US tax credit for EV buyers.
Tesla also faces increased competition from other automakers, particularly in China, Tesla’s second largest market behind the United States. In fact, Tesla in 2025 lost its title of world’s largest electric vehicle maker to Chinese automaker BYD.
The end of the Model S and Model X will have a limited impact on Tesla’s sales. Together they make up only 3% of its global deliveries. Production is due to end at some point next quarter.
In its earnings report, the company disclosed for the first time that Tesla reached a deal to invest $2 billion in xAI. The AI company, which Musk owns and started in 2023, also owns his social media platform, X.
The promise of robotaxis and robots was enough to lift the stock to a record level in December, although it has retreated somewhat since that peak.
Shares of Tesla (TSLA) rose slightly in after-hours trading after the company said in its earnings statement that it planned to expand its robotaxi service to seven markets in the first half of this year. That’s on top of the two it currently serves.
The company previously said that its robotaxi service would serve half of the US population by the end of 2025. Musk reiterated that goal on Wednesday, saying between a quarter to half of the United States will have fully autonomous vehicles by the end of 2026, “pending regulatory approval.”
The story has been updated with additional details.
The-CNN-Wire
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