Earlier this week, Tesla released quarterly earnings. Instead of any specific number grabbing headlines, there was one line from Elon Musk on the Tesla earnings call that made waves. Tesla will be discontinuing both the Model S and Model X. The Model S put Tesla on the map prior to the Model 3, offering the longest range out of any Tesla vehicle. The Model X has been Tesla’s genuine SUV offering. The move is the latest in a string of strategy decisions that is causing the Tesla community to scratch their collective head. We have another example of Musk taking unnecessarily risky steps to chase a future that he’s painting as big, bold, and essential.
Tesla finds itself in a multi-year downtrend. Beginning in late 2022 with higher interest rates coming out of the pandemic, Tesla began to see notable weakness in demand for its vehicles. The situation then took a turn for the worse with Musk’s decision to wage a brutal price war with the competition. My thinking continues to be that the decision led to well-liked Tesla CFO Zach Kirkhorn to quit suddenly. It’s never a good thing when a public company CFO quits suddenly. The bottom then dropped when Musk decided to go full-blown into politics in the summer of 2024. Musk’s words and actions weren’t just turning off a good portion of his current customer base. They were dramatically limiting the pool of Tesla’s next marginal customer. Declining sales growth in deliveries eventually turned to actual declines in deliveries. Tesla saw its first full-year revenue decline in 2025 with total revenue just 17% higher than the total seen in 2022. Musk is now focused on changing the Tesla story away from car sales and to autonomous fleets and humanoids.
Musk’s latest decision is to discontinue Tesla’s most premium vehicles. The stated rationale is that Tesla will convert vehicle production space that had gone to the Model S and Model X at the Fremont factory to an Optimus factory. The decision is a
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