Tesla pivots Fremont factory to robotics as legacy EVs end

Tesla will cease production of its Model S sedan and Model X SUV next quarter, marking the end of the vehicle programs that established the company’s early market credibility. CEO Elon Musk announced the decision on Wednesday during the company’s quarterly earnings call, citing a strategic shift toward an autonomy-based future. Once production ends, Tesla plans to build its Optimus robots in the same space at its primary factory in Fremont, California. Musk stated, “It’s time to basically bring the Model S and X programs to an end with an honorable discharge, because we’re really moving into a future that is based on autonomy.” While the company is retiring these models, Musk asserted that Tesla will offer support for existing Model S and Model X owners for as long as they have the vehicles.

The Model S and Model X were foundational to Tesla’s rise. Launched in 2012, the Model S was Tesla’s first ground-up electric sedan, debuting with a base price of $57,400. The vehicle quickly gained traction, securing more than 10,000 reservations by June 2012. It was named MotorTrend’s car of the year, beating out competitors from around the world. Over the years, Tesla iterated on the sedan, introducing “Ludicrous Mode” to enable acceleration from 0 to 60 m.p.h in just 2.8 seconds. The Model X SUV followed, hitting the streets in 2015. Although both vehicles received exterior and interior refreshes in 2021, sales have flatlined in recent years amid rising competition in the luxury EV space from legacy automakers and upstarts like Rivian and Lucid Motors. Musk had admitted in early 2022 that halting production before the redesigned Model X was ready was a mistake, and had noted as early as 2019 that the legacy models were of minor importance to Tesla’s future.

While Tesla retires its legacy luxury models, production of the Cybertruck will continue at its factory outside of Austin. However, the electric truck has bombed since its delayed release. Tesla originally planned a base price of $40,000 and an annual production target of 250,000 units. A supposed backlog of 2 million orders never materialized, and the company has struggled to sell just a few thousand units per quarter. The discontinuation of the Model S and Model X allows Tesla to fully exit these low-volume luxury lines as it attempts to transition from a traditional automaker into an autonomy and robotics company.

Why it matters

Tesla is shifting its manufacturing focus from legacy luxury EVs to robotics and autonomy, marking the end of the vehicle programs that established the company’s market credibility.