Tesla Shifts Gears from Cars to Humanoid Robots Called 'Optimus' and Musk is Going All In

In a massive shift for the electric vehicle giant, Tesla CEO Elon Musk announced on Wednesday, 28 January, that the company will stop making its flagship Model S and Model X vehicles. The historic factory in Fremont, California, which has produced these cars for over a decade, will be converted. Instead of cars, the facility will focus on building 'Optimus', Tesla's humanoid robot.

Musk made the announcement during the company's fourth-quarter earnings call. He stated that the time had come to move on from the cars that defined Tesla's early success.

'It's time to basically bring the Model S and X programmes to an end with an honourable discharge,' Musk said. 'If you're interested in buying a Model S and X, now would be the time to order it.'

The End of a Motoring Era

The Model S saloon and the Model X SUV are the oldest vehicles in Tesla's current lineup, aside from the original Roadster. The Model S launched in 2012 and changed how the world viewed electric transport. The Model X followed three years later. However, in recent years, these expensive luxury models have become less important to the company's bottom line.

Last year, the more affordable Model 3 and Model Y accounted for 97 per cent of Tesla's 1.59 million deliveries. The company has also faced tough global competition, forcing them to slash prices. Currently, the Model S starts at about $95,000 (£75,000), while the Model X is around $100,000 (£79,000). In contrast, the popular Model 3 starts at roughly $37,000 (£29,000).

This decision comes as Tesla reported its first annual revenue decline on record. Sales fell in three of the past four quarters. Musk is now steering the company away from traditional electric vehicles toward a future of driverless cars and humanoid robots.

The Rise of the Optimus Robot

With the car production lines shutting down, the spotlight is now firmly on Optimus, Tesla's bipedal, intelligent robot. Musk envisions it as a machine capable of doing almost anything, from factory labour to domestic assistance.

During the earnings call, the company confirmed plans to unveil the third generation of Optimus, known as 'Optimus V3', this quarter. Tesla called it their 'first design meant for mass production'.

During the Q3 2025 earnings call, Musk spoke about the upcoming V3 to build excitement. The current version, Optimus V2.5, features significant improvements over the original, but Musk clarified that the V3 is a major leap forward. It will include 'major upgrades from version 2.5, including our latest hand design'.

Factories Gear Up for Mass Production

To meet the ambitious goals for Optimus, Tesla is expanding its manufacturing capabilities. The Fremont factory in California will be cleared of Model S and X machinery to make room for the robots. This transition is expected to happen in the second quarter of 2026.

In addition to Fremont, Tesla has already started work on a massive purpose-built factory for the robots. Reports from late 2025 indicated that Tesla began construction on a dedicated Optimus factory at its Giga Texas site, signalling the company's intent to scale output dramatically.

Musk has stated that the first production line will commence 'before the end of 2026'. The company is planning for an eventual capacity of 1 million robots produced per year. While Musk previously predicted Tesla would produce 5,000 robots in 2025, it is unlikely that milestone was met.

Capabilities and Future Promises

Musk has made bold claims about Optimus, suggesting it could serve as home assistants and even perform surgery in the future. He said Tesla will begin selling the robot to the public 'next year'.

Despite the excitement, the rollout of Optimus has faced challenges. Issues with teleoperations (remote control) and the recent departure of Tesla's head of robotics have raised concerns. Critics remain sceptical about whether the robot can perform autonomous tasks safely in the real world.

However, the stakes are high. Musk's financial targets and the company's future growth are now heavily dependent on the success of these humanoid robots.