Tesla will stop building the Model S and Model X at its Fremont, California factory by the second quarter of 2026 and hand that production space over to Optimus, the company’s humanoid robot program. Elon Musk announced the plan during Tesla’s Q4 2025 earnings call, setting a long-term target of roughly one million Optimus units per year from the same floor space. The decision kills two of Tesla’s oldest vehicle lines and redirects factory capacity toward a product that has never been sold to an outside customer.
Why the Fremont factory conversion changes Tesla’s revenue math
The Model S sedan launched in 2012 and the Model X SUV followed in 2015. Both were low-volume vehicles compared to the Model 3 and Model Y, but they occupied dedicated assembly infrastructure at Fremont for more than a decade. Ending those lines removes finished cars from Tesla’s delivery count at a time when EV competition is intensifying from legacy automakers and Chinese manufacturers alike.
The practical question is whether the lost vehicle output will show up in Tesla’s quarterly numbers. If the Fremont S/X floor space is fully retooled by late 2026, Tesla’s year-over-year vehicle deliveries in 2027 could decline measurably, even if Model 3 and Model Y volumes hold steady. At the same time, any revenue from Optimus production would begin appearing in Tesla’s non-automotive segment, creating a new line item that investors and analysts will track in future 10-Q filings. The trade-off between proven car revenue and speculative robotics income is the central tension behind this factory shift.
Tesla’s annual report for fiscal year 2025 describes the company as pursuing a “physical AI” strategy and notes rising capital spending on robotics. That language frames Optimus not as a side project but as a core business priority that now has dedicated manufacturing real estate.
Musk’s earnings call statement and the SEC record
During Tesla’s Q4 2025 earnings webcast, Musk was direct about the plan. “We will take the Model S/X production space in Fremont and convert it into an Optimus factory,” he said, according to the call transcript. He added that the long-term goal is roughly one million Optimus units per year in that same space. The one-million figure has also been reported by trade publications covering manufacturing logistics.
Tesla furnished a Current Report on Form 8-K to the SEC on January 28, 2026, which included Exhibit 99.1 containing the company’s Q4 and full-year 2025 operational update. That filing is the official regulatory anchor for the earnings period in which Musk made the conversion announcement. The 10-K filed shortly after covers Tesla’s business description, risk factors, and property disclosures for the same fiscal year.
Contemporaneous news coverage confirmed that Model S and Model X production would end in Q2 2026 and that the Fremont space devoted to those vehicles would transition to Optimus assembly. The timeline gives Tesla less than two full quarters to wind down legacy production and begin retooling.
What Tesla has not disclosed about the Optimus factory plan
Several material details are missing from the public record. Tesla’s 10-K and 8-K filings do not break out exact capital-expenditure line items or square-footage allocations for the Optimus conversion. Investors know that robotics spending is rising, but they cannot yet isolate how much of Tesla’s total capex budget is flowing into the Fremont retooling versus other projects like the Cybertruck ramp or new Gigafactory expansions.
Workforce specifics are also absent. The earnings transcript does not address how many Fremont employees currently work on the S/X lines, whether those workers will be retrained for Optimus assembly, or whether layoffs are expected. For a factory that has been a fixture of Bay Area manufacturing employment since the NUMMI joint-venture era, the human impact of this transition is a significant gap in the available information.
Supplier contracts and component sourcing for Optimus actuators, sensors, and batteries appear only in secondary manufacturing coverage, not in Tesla’s primary SEC disclosures. Without that detail, it is difficult to assess whether the one-million-unit annual target is an engineering plan backed by supply agreements or an aspirational number without a concrete procurement foundation.
The next data points to watch are Tesla’s Q1 and Q2 2026 earnings reports, which should reveal whether Model S and Model X deliveries are declining on schedule, and Tesla’s next 10-Q filing, which could contain the first line-item evidence of Optimus-related capital deployment at Fremont. Those filings will determine whether this factory conversion is proceeding on the timeline Musk described or running into the kind of production delays that have marked other Tesla hardware programs.
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*This article was researched with the help of AI, with human editors creating the final content.
