Tesla shuts down the Model S and X and bets everything on Optimus robots: Elon Musk's strategic pivot

Tesla shuts down the Model S and X and bets everything on Optimus robots: Elon Musk's strategic pivot

Tesla's decision to abandon production of the Model S and Model X and retool its Fremont plant to build Optimus humanoid robots signals the company's shift from being an automaker to a robotics and automation platform.

Elon Musk's announcement that the Model S and Model X will be discontinued is more than just news.

The end of the flagships as a conscious step, not a defeat

The Model S and Model X were Tesla's first mass-market products after the Roadster and played a key role in shaping the brand. However, in recent years, they have ceased to be growth drivers. High prices, limited demand, and increasing competition in the premium EV market have rendered them economically secondary.

Facts support this shift: nearly 97% of all Tesla deliveries last year were Model 3 and Model Y. The mass-market segment proved significantly more resilient, while premium models were more vulnerable to demand cycles and pricing pressure. Against this backdrop, Musk's decision to "give the Model S and X an honorable retirement" seems less emotional and more coldly rational.

The first annual decline and the need for a new narrative

Tesla recorded its first-ever decline in annual sales. This is a critical moment for a company whose valuation has always been based on expectations for the future, not current financial performance. In this situation, Musk needed to offer the market a new growth story.

And this story isn't about the evolution of electric vehicles, but about a radical shift toward robotics, autonomy, and artificial intelligence. Optimus, in this context, isn't a side experiment, but a central element of a long-term strategy.

Tesla shuts down the Model S and X and bets everything on Optimus robots: Elon Musk's strategic pivot

Fremont as a Symbol of Transformation

The Fremont plant is one of Tesla's most iconic assets. It was here that mass production began, and where the company's culture was shaped. The conversion of the Model S and X production lines to accommodate Optimus production with a capacity of up to one million units per year is not just a technological upgrade, but a symbolic break with the previous business model.

Importantly, Musk emphasizes that the Optimus supply chain has virtually no overlap with the automotive supply chain. This means that Tesla is essentially building a new business within its existing infrastructure, leveraging its experience in scaling, automation, and vertical integration.

Optimus as a bet on a market that doesn't yet exist

Optimus is currently generating no revenue. The market for humanoid robots in the traditional commercial sense does not yet exist. This is why Tesla's decision appears risky according to traditional analysis, but logical in the context of Musk's philosophy.
Optimus is designed to perform a wide range of physical labor, from factory operations to everyday tasks. If Tesla can bring this robot to the mass market, it will open the company to a trillion-dollar economy, surpassing the auto market.

As was the case with electric cars ten years ago, Tesla is trying not to compete in an existing segment, but to create a new one.

Impact on the labor market and industry

Musk announced plans to increase staffing and expand production in Fremont. This is an important point: contrary to fears of automation, Tesla is not cutting jobs in the short term, but rather redistributing them.
However, in the long term, Optimus is a technology capable of radically changing the labor market. If humanoid robots become cost-effective, they will impact manufacturing, logistics, service, and consumer services. Tesla is effectively becoming one of the architects of this transition.

Investors between skepticism and faith

The decision to discontinue the Model S and X may seem alarming to investors focused on current cash flow. However, for long-term Tesla supporters, it confirms that the company has no intention of becoming a "regular" automaker.

Tesla's history has always been built on a belief in a future that hasn't yet arrived. Now that future isn't cars, but autonomous systems and robotics.

Tesla is no longer just a car company

The demise of the Model S and X marks a strategic shift: Tesla is no longer defining itself through cars. Electric vehicles are becoming just one product in an ecosystem where AI, autonomy, and physical robots are key assets.
This move is risky, but consistent. Musk is once again betting not on optimizing the existing market, but on creating a new one. And this is precisely what makes Tesla unique among traditional automakers.
Written by Ethan Blake
Independent researcher, fintech consultant, and market analyst.
January 29, 2026

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