Tesla to stop making Model S and Model X next quarter to pivot to Optimus production

Tesla is not bringing S3XY back.

On the company’s earnings call Wednesday, CEO Elon Musk said Tesla would be discontinuing production of its Model S and Model X vehicles next quarter. (For the uninitiated, together with the Model 3 and Model Y, the cars spell “S3XY.”)

“We are going to convert that production space to an Optimus factory,” Musk said. “It’s part of our overall shift to an autonomous future.”

Shares of the company pared some of their post-earnings gains after the comments. They were recently up 1.3% after-hours.

In the future, Musk said he expects to produce “several times more Cybercabs per year than all our vehicles combined.”

Of course, Tesla has been banging the drum that it’s an autonomous and AI company rather than a car company for years, but this latest move makes that claim more concrete.

Tesla has been facing declining vehicle sales and has staked its future on driverless cars and its AI robots. That said, cars still make up the vast majority of Tesla’s revenue — 73% last year.

The Model S is Tesla's luxury sedan. The Model X is an SUV with gull-wing doors. Both are among its pricier models and haven't gotten meaningful updates in recent years. Notably, those models don’t sell nearly as well as the Model 3 and Y, which made up 43% of EV sales in the US last quarter, according to data from Cox Automotive, compared with just 1.5% for the S and X.

Meanwhile, Cybercab and Optimus models aren’t yet for sale. Tesla said Optimus would be available next year, while Cybercab would go into volume production in 2026. Additionally, even though Tesla announced last week that it was removing drivers from its Austin Robotaxis, that only amounted to two or three cars. Since then, those driverless cars have been MIA.