Tesla Officially Bids Farewell to Model S and Model X, Halting Production of These Flagship Models
At the end of the promotional video, the Model S departs at a fork in the road, followed by the Cybercab, symbolizing the company's transition from traditional high-end sedans/SUVs to Robotaxi.
This move frees up production capacity and resources for next-generation products like Cybercab and Optimus. The Model S/X has been in production for over ten years, becoming a pillar of Tesla's early brand.
Source: Public Information
ABAB AI Insight
Tesla first announced during the Q4 2025 earnings call that production of the Model S/X would end in Q2 2026. This formal farewell continues Elon Musk's strategic shift from "selling cars" to "selling robots and Robotaxis." Earlier, some production capacity at the Fremont factory was redirected towards the Optimus humanoid robot.
From a capital perspective, Tesla is concentrating production resources and Capex on mass production of Cybercab and the Optimus factory, motivated by the relatively low profit margins and declining sales of the Model S/X. This prioritizes freeing up supply chain and factory space for the high-potential Robotaxi fleet and robotics business while maintaining short-term cash flow through inventory liquidation.
Similar to how Apple gradually phases out older iPhone models in favor of new product forms, and traditional automakers transition from fuel vehicles to EV/Robotaxi, Tesla is currently in a phase of transforming from a high-end passenger car manufacturer to an AI + robotics platform company. Companies with strong first-mover execution are accelerating the realization of new businesses through product line simplification.
Essentially, this is a restructuring of the industry chain: halting production of the Model S/X shifts pricing power from traditional high-end hardware sales to Robotaxi services and robot subscription models. The mechanism is that autonomous platforms like Cybercab can generate continuous recurring revenue, far exceeding one-time vehicle sales, forcing the company to evolve from asset-heavy manufacturing to a light-asset, high-utilization AI service structure.
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Old flagships make way for new Robotaxis, which truly unlock the revenue ceiling. Selling one car earns once, selling a platform earns for a lifetime, which is the most efficient capital allocation. Bidding farewell to the past is not an end, but the beginning of exchanging capacity for future pricing power.