TLDR
- Tesla is discontinuing Model S and Model X production to prioritize autonomous vehicles and Optimus humanoid robots
- The company has 1.1 million Full Self-Driving subscribers with 38% annual growth outpacing 22% vehicle delivery growth
- Tesla operates 500 robotaxis in Austin and San Francisco with plans to double the fleet monthly and add seven cities in 2026
- Optimus Gen 3 robot debuts this quarter with production starting by end of 2026 targeting 1 million annual units
- Analysts project Optimus could generate $25 billion in revenue compared to $3 billion from Model S and X
Tesla just killed off two of its most famous cars. The Model S and Model X are done.
CEO Elon Musk announced the decision during the company’s Q4 earnings call. “It’s time to basically bring the Model S and X programs to an end with an honorable discharge,” he said.
The Model S launched in 2012 and changed the EV game. Now it’s getting replaced by robotaxis and humanoid robots.
Tesla needs the factory space for six new production lines. Those lines will build Cybercab robotaxis and Optimus robots instead of luxury sedans and SUVs.
“We’re really moving into a future that is based on autonomy,” Musk declared. This isn’t tweaking the product lineup. This is abandoning the car business.
The numbers back up the strategy. Tesla now has 1.1 million paying Full Self-Driving subscribers. That’s 38% growth year-over-year.
Vehicle deliveries only grew 22%. The software business is outpacing car sales.
Lars Moravy, Tesla’s VP of vehicle engineering, explained the shift. “You have to start thinking about us as moving to providing transportation as a service,” he said.
Robotaxi Fleet Expansion Accelerates
Tesla currently runs about 500 robotaxis in Austin and San Francisco. The company plans to add seven new cities this year.
Musk wants to double the robotaxi fleet every month. William Blair analyst Jed Dorsheimer predicts Tesla will surpass Waymo’s 2,000 vehicles by April.
Even the Cybertruck is getting repurposed. Musk said Tesla will convert the Cybertruck line to fully autonomous cargo delivery vehicles for local urban transport.
The company is building infrastructure to support massive scale. “We are the only company capable of scaling at the rate that is needed for the tsunami of autonomy that is coming,” Moravy claimed.
The $25 Billion Robot Bet
Optimus humanoid robots represent Tesla’s biggest gamble. The Gen 3 model launches this quarter with production starting before 2026 ends.
Tesla is targeting 1 million robots per year production capacity. At a $50,000 price point, that’s $25 billion in potential revenue.
Compare that to the $3 billion the Model S and X generated. The trade makes financial sense.
“It’s clear to us why the company is making this trade,” Dorsheimer wrote in his investor note.
Canaccord Genuity analyst George Gianarikas called it “a total commitment to a vision that leaves no room for retreat.” Piper Sandler’s Alex Potter said Tesla is “burning the boats, pinning its future on autonomous cars and robots.”
Market Valuation Reflects Tech Play
Tesla’s stock trades at a forward P/E ratio of 196 times. That’s tech company territory.
General Motors and Ford trade at single-digit P/E multiples. The market already sees Tesla as a technology and AI company, not an automaker.
Wedbush analyst Dan Ives projects Tesla could reach $2 trillion market cap in early 2026 and $3 trillion by year-end in a bull scenario. Tesla currently has 500 robotaxis operating across Austin and San Francisco with seven new markets launching in 2026.
