Elon Musk to Prioritize Robots Over Electric Vehicles

Tesla CEO Elon Musk has announced plans to halt production of the Model S and Model X electric vehicles and retool the factory to produce Optimus humanoid robots, BBC News reports. This decision comes amid the first annual revenue decline in the company’s history.

“It’s time, basically, to wind down the Model S and X programs,” Musk stated during a call with investors.

The shift follows a significant financial downturn: in 2025, total revenue fell by 3%, while profits for the final quarter of the year plummeted by 61%.

This financial slump has been driven by China’s BYD taking the lead in the global EV market and a backlash from customers over Musk’s political activism. Additionally, the reduction of government subsidies in the U.S. is pushing Tesla to shift its focus away from traditional electric cars toward robotaxis and AI (Artificial Intelligence).

Despite opposition from some shareholders, Musk has invested $2 billion of Tesla’s funds into his own startup, xAI. Over the next 10 years, Musk plans to increase capital expenditures to $20 billion to boost the company’s market capitalization and secure his record-breaking $1 trillion compensation package. Analysts view the abandonment of flagship models as a definitive step toward Tesla becoming a "physical AI" company.