The company will stop making the pioneering EVs in the second quarter of 2026, CEO Elon Musk announced Wednesday.

On Tesla's fourth-quarter earnings call, CEO Elon Musk said the company is ending production of its Model S and X vehicles.

Tesla Inc. plans $20 billion of spending this year to streamline its electric-vehicle lineup and shift resources toward robotics and AI, part of a sweeping set of changes pushing the company further from its roots as an automobile manufacturer.

The automaker also said it would invest $2 billion in xAI, the artificial intelligence company controlled by its C.E.O., Elon Musk, and stop making the two oldest cars in its lineup.

As a result, total revenues for 2025 only fell by 3 percent. But Tesla saw a 38 percent drop in income from operations, and its expenses went up by 23 percent. As a result, the company’s once-envied profit margin was just 4.9 percent for the year, down from 7.2 percent last year. (In 2022, Tesla had a 23.8 percent profit margin.)

The company announced it was ending production of its higher-end Model S and Model Y, and turning that production space over to making humanoid robots.

Elon Musk said Tesla Inc. needs to build and operate what he is calling a “TeraFab” to manufacture semiconductors, a massive undertaking that will cost billions of dollars and mark another expansion beyond what had been the company’s core electric vehicle business.

Tesla CEO Elon Musk announced a $2B investment into xAI and the discontinuation of Model S and Model X in order to support Optimus robot production.

Tesla reports fourth-quarter earnings after the closing bell on Thursday. Investors will be listening for updates on the company's AI future and on how Tesla is contending with a tougher EV market.