While Tesla romances AI investors with promises of a robotic future, the carmaker is saying “sayonara” to two ground-breaking EVs.
CEO Elon Musk told investors on an earnings call last week that the time has come for its revolutionary Model S sedan and Model X sport-utility vehicle to receive an “honorable discharge.” It’s enough to make investors wonder whether Tesla, once the face of electric vehicles, will next attempt a Facebook-to-Meta style rebrand, awarding side-hustle status to the car business that made Musk the world’s wealthiest man.
‘No Room for Retreat’
There are other signs supporting that theory. Earlier this month, Tesla lost its title as the world’s best-selling EV maker to Chinese company BYD; Tesla said it delivered 1.64 million EVs last year, while BYD sold 2.26 million. (Volkswagen had already beaten Tesla’s EV sales in Europe.) The replacement for Tesla’s retiring EV models? Robots, of course. The company’s Fremont, California, factory that was home to Model S and X production will now be where it builds Optimus humanoid robots that Tesla says will be “capable of performing unsafe, repetitive or boring tasks.”
Tesla is “really moving into a future that is based on autonomy,” Musk said on the company’s earnings call. And it plans to spend more than $20 billion this year to do it, which is more than double the $8.5 billion it spent in 2025. Tesla can afford it. Its balance sheet (with a whopping $44 billion in cash) and operating cash flow provide significant flexibility as the company continues to pivot from a hardware-centric automaker to a diversified technology firm, Garrett Nelson, an analyst at CFRA Research, told The Daily Upside.
“Forget the Tesla you knew,” Canaccord Genuity analysts wrote in a recent note. “The Tesla of yesterday is gone. We believe Elon Musk has reached a definitive ‘burn the ships’ inflection point — a total commitment to a vision that leaves no room for retreat.”
The company is also increasing ties to Musk’s other businesses:
Tesla said it has agreed to invest about $2 billion into xAI — best known for developing Grok, the AI chatbot integrated into the social media platform X — amid a financing round announced earlier this month.
Last week, Bloomberg reported that SpaceX is considering a potential merger with Tesla or xAI, citing people familiar with the matter. They added that a deal could attract significant interest from infrastructure funds and Middle Eastern sovereign investors.
Robotaxi Rivals: Tesla faces more competition from Waabi, an autonomous trucking startup that has raised $1 billion in funding in part to grow its robotaxi business. Waabi Driver-powered robotaxis will be exclusively offered via Uber, the company announced last week.
