Tesla halts Model S and Model X production to focus on robotics and AI investment

Tesla announced it will discontinue production of its older Model S and Model X electric vehicles to allocate factory resources toward manufacturing Optimus robots. The move comes after Tesla reported its first-ever decline in annual revenue, amid increasing competition in the EV market from companies like China’s BYD. CEO Elon Musk highlighted that investment in the company will more than double this year to $20 billion, with $2 billion dedicated to his AI division, xAI. The company aims to fulfill long-standing goals in robotics and self-driving technology, including the development of Cybercabs (robotaxis), which have faced delays due to limited production capacity and regulatory hurdles. Tesla’s recent EV sales suffered from political backlash, the removal of US EV tax incentives, and aggressive pricing from competitors. Despite these challenges, Tesla shares rose 2% in after-hours trading, reflecting investor optimism about Musk’s AI and robotics initiatives. Musk is also under pressure to meet a long-term share price-based incentive potentially worth $1 trillion, while managing multiple ventures including the planned public offering of SpaceX.