Here's Why Tesla Is Discontinuing the Model S and Model X

Core Viewpoint - Tesla's decision to discontinue the Model S and Model X is part of a strategic evolution towards a focus on autonomy rather than a retreat from the electric vehicle market [1][2]. Group 1: Production Decisions - The Model S and Model X are higher-cost models that do not significantly contribute to Tesla's sales, with only 4,000 units delivered in the last quarter, representing just 1.2% of total deliveries [4]. - The market is shifting towards lower-cost models, as evidenced by the decline in Model S/X sales and the production of more affordable versions of the Model 3 and Model Y [5]. - Tesla is reallocating production space at its Fremont factory, previously used for the S and X, to manufacture its Optimus robot as part of a $20 billion capital spending commitment by 2026 [6]. Group 2: Market Trends and Future Direction - The automotive industry is moving towards an autonomous future, with Tesla making gradual progress towards achieving autonomous robotaxis, unlike competitors who have struggled in this area [8]. - The cost dynamics of electric vehicles favor heavy usage, particularly in taxi applications, which will be enhanced by the introduction of dedicated robotaxi vehicles like the Cybercab [9]. - Discontinuing the Model S and Model X aligns with current market conditions and the overall direction of the EV market, marking a natural evolution in Tesla's business strategy [12].