Tesla is making significant changes as it announces the halt of production for two of its premium models, the Model S and Model X. This decision comes amid declining profits and sales, prompting the company to pivot towards robotics instead.
Tesla’s Shift in Focus
During a recent earnings call, CEO Elon Musk revealed plans to convert the production space for the Model S and Model X into facilities for building humanoid robots. Musk suggested that the company may shift its emphasis away from electric vehicles (EVs) toward its vision of autonomous technologies.
Declining Profits and Sales
In the last quarter of 2025, Tesla reported an adjusted income drop of 16%. Its net income fell even more dramatically, down 61% compared to the previous year and resulting in a $3.3 billion loss. This downturn represents the largest year-over-year decline in sales volume for Tesla since its inception, marking a stark contrast to its earlier rapid growth.
- 2025 adjusted income decrease: 16%
- Net income drop: 61% in Q4 2025
- Total decline for the year: $3.3 billion
Since reaching peak earnings of $12.6 billion in 2022, Tesla’s income has plummeted to only 30% of that figure. Competition from other automakers, especially within the burgeoning Chinese EV market, has intensified, leading to Tesla losing its title to BYD as the largest electric vehicle manufacturer globally.
Future Plans and Robotaxi Ambitions
Musk has ambitious plans for Tesla’s future, predicting that a self-driving “robotaxi” known as the Cybercab will significantly outpace existing sales. However, the robotaxi service is not yet widely operational, with Tesla still relying on employee safety monitors in vehicles.
The company aims to expand this robotaxi service to seven additional markets in the first half of this year, complementing the two it currently serves. By the end of 2025, Tesla envisions that half of the United States will have access to fully autonomous vehicles, contingent upon regulatory approval.
Market Dynamics and Challenges
Tesla’s brand reputation has faced setbacks within American and European markets, influenced by Musk’s political activities. Additionally, the end of a $7,500 U.S. tax credit for EV purchases has impacted overall sales in the electric vehicle sector.
Despite these challenges, Tesla’s decision to discontinue the Model S and Model X is expected to have a minimal effect on global deliveries. These models account for only 3% of the company’s total sales.
Investment in AI and Future Innovations
In a notable development, Tesla announced its investment of $2 billion in xAI, an artificial intelligence company initiated by Musk in 2023. This investment signifies Tesla’s commitment to advancing AI technologies alongside its ambitious goals in the automotive sector.
As Tesla navigates these changes, it aims to leverage its innovations in robotics and autonomous vehicles, signaling a transformative era for the company.
