Elon Musk says Tesla ending Models S and X production as Tesla reports its first annual revenue decline on record

Core Viewpoint - Tesla is ending production of the Model S and Model X to focus on new projects, including humanoid robots and autonomous driving technology [1][2][5]. Production Changes - The production of Model S and Model X will cease, with Musk referring to this as an "honorable discharge" and encouraging customers to place orders before stocks run out [1][2]. - The Fremont factory will be repurposed to manufacture Tesla's humanoid robots, Optimus, with plans to achieve a production line of 1 million units per year [6]. Financial Performance - Tesla experienced its first annual revenue decline, with a decrease of approximately 3% to nearly $94.83 billion in 2025 [4]. - Adjusted earnings per share for Q4 were 50 cents, surpassing Wall Street expectations of 45 cents, while net income fell 61% to $840 million [4]. - The company is projected to deliver 1.77 million vehicles in 2026, representing an 8.2% increase [4]. Market Focus - Tesla's sales are primarily driven by the Model 3 and Model Y, which together accounted for 97% of deliveries in 2025, totaling 1.59 million units [3]. - The company is shifting its focus towards driverless cars and humanoid robots, areas that currently lack significant business or profits [5]. Semiconductor Strategy - Musk announced plans for Tesla to build a "TeraFab" for semiconductor manufacturing to mitigate future supply chain constraints [7]. - The company currently relies on external suppliers for chips, including Micron Technology, Samsung, and TSMC [8]. Geopolitical Considerations - Musk emphasized the importance of addressing geopolitical risks in the semiconductor supply chain, suggesting that these factors may become increasingly significant in the coming years [9].