Tesla, Inc. is calling time on its flagship Model S and Model X, giving the veteran EVs an “honourable discharge” as production winds down next quarter. The mission? To clear the decks at the Fremont factory for Tesla’s real obsession: the Optimus humanoid robot. Confirmed in the latest shareholder deck and a rather punchy earnings call, the move signals a definitive pivot from luxury car maker to a full-blown AI and robotics powerhouse.
CEO Elon Musk has set a target that sounds like something out of a mid-century sci-fi novel: retooling the California plant to eventually churn out a staggering one million Optimus units per year. This “all-in” play rests on the upcoming Gen 3 Optimus, the first iteration designed specifically for mass production, which is slated for a Q1 reveal. The brains behind the operation is the new AI5 chip, a project Musk describes as “arguably the number one most critical thing to get done”—so much so that he’s personally putting in the Saturday shifts to see it over the line.
The strategic shift was laid bare in Tesla’s Q4 Shareholder Deck, which, for the first time, officially listed the Optimus production line in California as “under construction.” The company expects to have the assembly lines humming before the end of 2026. This pivot comes at a pivotal moment; with Tesla reporting its first-ever full-year revenue decline, sacrificing the prestige models that built the brand is a cold, calculated bet on an autonomous future.
Why does this matter?
Tesla is making it crystal clear that it no longer sees its future in just shifting tin. By sunsetting its original, high-margin luxury vehicles, it is freeing up the capital and floor space for what it believes is the ultimate prize: general-purpose humanoid robots. The million-unit annual target isn’t just ambitious; it’s a declaration of intent to dominate a market that, for now, barely exists.
The AI5 chip is the linchpin of this entire vision, designed to power not only the next generation of autonomous vehicles but an entire army of robotic workers. This move fundamentally redraws Tesla’s competitive map, pitting it less against traditional car manufacturers and more against the titans of AI and silicon. It’s a high-stakes punt that bets the company’s entire legacy on a world populated by its own intelligent machines.
