Tesla confirmed it will discontinue the Model S sedan and Model X SUV, ending production of the two vehicles that built the company’s reputation as a premium electric automaker. CEO Elon Musk announced the decision during Tesla’s fourth-quarter 2025 earnings call, framing it as a strategic reallocation of factory capacity toward robotics and autonomous driving. The move strips Tesla’s lineup of its oldest nameplates and signals that the company now views its future less as a carmaker and more as an AI and robotics firm.
Vanishing Sales Made the Decision Easy
The raw delivery numbers tell the clearest part of this story. Tesla reported that its “Other Models” category, which groups the Model S, Model X, Cybertruck, and Semi, accounted for just 50,850 deliveries across all of 2025. By contrast, the Model 3 and Model Y together reached 1,585,279 deliveries for the same period. That means the entire “Other Models” bucket represented roughly 3 percent of Tesla’s total volume, and the Model S and X were only a fraction of even that small figure, sharing the category with the newer Cybertruck and the commercial Semi.
The fourth quarter alone sharpened the picture further. Q4 2025 “Other Models” deliveries came in at just 11,642 units. For context, Tesla was delivering more Model 3 sedans in a single week at its peak than the S and X managed together in an entire quarter. When a product line contributes so little to total output, the calculus shifts from “how do we refresh it” to “what else could this factory space produce.” That arithmetic, more than any single design flaw or competitive loss, is the core reason these vehicles are going away.
Musk’s “Honorable Discharge” and What It Really Means
On the earnings call, Musk chose a military metaphor to describe the end of the Model S and X, calling it an “honorable discharge” for the two vehicles. The phrasing was deliberate. Rather than admitting that demand had dried up for aging models that last received a significant interior overhaul years ago, Musk cast the retirement as a dignified sendoff for cars that served their purpose. He used the same call to stress that Tesla’s priorities now center on autonomy and robotics, with factory floor space and engineering hours redirected accordingly.
That framing deserves some scrutiny. An “honorable discharge” implies a mission completed, but the Model S and X were originally positioned as Tesla’s technology flagships, the halo cars meant to pull buyers into the brand before cheaper options arrived. Retiring them without direct replacements suggests Tesla no longer believes it needs a traditional luxury halo vehicle to attract customers. Instead, Musk is betting that the promise of self-driving robotaxis and humanoid robots will do more for Tesla’s valuation and brand identity than a refreshed luxury sedan ever could. Whether that bet pays off depends on timelines that Tesla has repeatedly missed in the autonomy space.
Factory Capacity as the Hidden Currency
The most practical reason behind the discontinuation is floor space. Tesla’s manufacturing footprint and capital priorities are laid out in its 2025 annual filing with the SEC, which underscores how tightly the company manages its plants and tooling. Producing low-volume luxury vehicles on lines that could instead support higher-margin robotics hardware or next-generation vehicle platforms is a direct cost. Every square foot dedicated to the Model S or X is a square foot not building Optimus robots or preparing for a purpose-built robotaxi, and every engineering team maintaining the aging S/X platform is a team not focused on Tesla’s next big bet.
This tradeoff matters because Tesla’s automotive revenue showed pressure in 2025, according to coverage of the Q4 results that highlighted investor concerns about slowing growth and shrinking margins. When top-line car revenue softens, executives look for places to cut complexity. The Model S and X, with their unique platform, falcon-wing doors on the X, and specialized components, represent exactly the kind of manufacturing complexity that drags on margins without delivering proportional volume. Killing both models at once eliminates an entire platform from Tesla’s production matrix, freeing engineering and supply chain resources for products Musk considers more central to the company’s next decade.
What This Means for Buyers and the EV Market
For consumers who wanted a premium Tesla with the space of a full-size sedan or a three-row SUV, the options just disappeared. The Model 3 and Model Y are capable vehicles, but they occupy a different market segment and lack the cachet that the S and X once carried. Buyers cross-shopping a BMW 7 Series or a Mercedes EQS against a Model S will now find Tesla absent from that conversation entirely. That creates an opening for legacy automakers and newer competitors like Lucid and Rivian to capture high-end EV buyers who might have defaulted to Tesla, especially as those brands expand their own lineups and refine software and charging experiences.
The broader signal is just as significant. Tesla is telling the market that traditional vehicle segmentation, the idea that a carmaker needs entries spanning economy to luxury, no longer applies to its business model. The company’s latest financial update, released alongside the discontinuation announcement, asks investors to judge performance less on unit mix and more on software and AI progress tied to autonomy and robotics. In that sense, the end of the S and X is part of a narrative pivot: Tesla wants to be evaluated like a high-growth technology platform rather than a mature automaker, even as the core of its revenue still comes from selling cars.
The Bet That Replaces Two Flagships
Strip away the corporate messaging and the strategic logic is straightforward: Tesla is trading a known, shrinking revenue stream for an unproven but potentially larger one. The Model S launched in 2012 and the Model X in 2015, and over more than a decade they became symbols of early EV adoption. Yet their age, combined with the dominance of the Model 3 and Y, made them increasingly peripheral to Tesla’s financial story. Musk is now effectively arguing that the opportunity in full self-driving, robotaxis, and humanoid robots dwarfs whatever incremental profit could be squeezed from another S/X refresh, and that the company’s scarce resources should chase that upside instead.
That argument is not just about products; it is about how Tesla engages with its most loyal supporters and critics. Enthusiasts who once lined up for performance upgrades and Plaid variants are being nudged toward a future in which the company’s most important “flagship” may be a software stack or a bipedal robot rather than a six-figure car. For those trying to follow the shift, tools like digital news accounts and weekly print subscriptions such as the Guardian’s international edition offer ongoing context as Tesla’s strategy evolves. At the same time, the company’s transformation into an AI-focused conglomerate will likely shape adjacent industries, from suppliers and charging networks to media, philanthropy, and even the labor market, areas where initiatives like reader-funded public-interest journalism and specialized EV and tech roles advertised on platforms such as The Guardian Jobs board help track how quickly the ground is shifting.
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*This article was researched with the help of AI, with human editors creating the final content.
