Tesla’s revenues fall for the first time, Musk announced a turnaround and shuts down the S and X models: ‘We will make robots there…’

The end of an era: an “hourly discharge” for the pioneers of the electric revolution

On a conference call with investors, Elon Musk confirmed what had been speculated for a long time. Production of the Model S sedan and Model X SUV, the vehicles that defined the premium segment of electric cars, will be phased out by the end of the second quarter of this year. The Model S, introduced in 2012, proved that electric cars can compete with luxury German sedans, while the 2015 Model X, with its distinctive “falcon-wing” doors, became a status symbol.

However, their time has passed. In 2025, these two models accounted for less than three percent of total sales, overshadowed by the far more popular and affordable Model 3 and Model Y. Musk described the decision as inevitable, but also emotional.

​- Basically, it’s time to bring the Model S and X programs to an end with čs release. It’s a bit sad, but necessary – said Musk, emphasizing that it is part of the company’s wider turn towards an autonomous future.

A car factory becomes a robot factory

The main reason for shutting down production is not only a drop in sales, butć release of key resources. The production lines at the factory in Fremont, California, where the S and X were produced, will be completely repurposed for the mass production of Tesla’s humanoid Optimus robot. Ambitions, as usual with Musk, are huge: the long-term goal is to produce around one million Optimus units per year in that facility. Unatoč this transformation, the factory in Fremont will continue the production of the Model 3 and Y, which continue to form the backbone of Tesla’s business.

The first drop in revenue in history and profit cut in half

While Musk talked about the future, the present brings challenges. The 2025 financial report revealed the first annual decline in total revenue since the company went public in 2010. Total revenue fell three percent to $94.8 billion. The decline is even more pronounced in the key automotive segment, where revenues fell by 11 percent. Net profit almost halved from the previous year, falling to $3.79 billion.

The reasons for the decline are multiple. At the end of September 2025, the tax incentive of $7,500 for the purchase of electric vehicles was abolished in the United States, which significantly slowed demand in the last quarter. At the same time, the competition is getting stronger, and in 2025, the Chinese BYD officially took over the title of the world’s largest producer of electric vehicles.

The future is in “physical artificial intelligence”

Despiteč worse numbers, Tesla shares rose by more than č four percent after the report was released. The reason lies in Musk’s ability to convince the market of a new story. Tesla, according to his words, is transforming from a “hardware company into a physical artificial intelligence company.” To this end, the company plans to invest a whopping 20 billion dollars in artificial intelligence, robotics and autonomous driving in 2026. This includes a recent investment of two billion dollars in Musk’s startup xAI.

At the center of that vision is Optimus, a robot that Musk claims will be “the greatest product of all time” and usher the world into an age of “incredible abundance” where poverty does not exist. Along with the robots, the focus is on the Robotaxi fleet and the fully autonomous Cybercab vehicle, which should begin mass production in April. It is precisely this futuristic vision that has calmed Wall Street and given them reason for optimism, even as the core automotive business faces its first serious difficulties.