Tesla will end Model S and X production, focus on humanoid robots at Bay Area factory

Tesla will be ending its production of Model S and Model X vehicles and switching to producing humanoid robots at its Bay Area factory, Elon Musk said on Wednesday.

The announcement was made by Musk during the company's earnings call.

"It's not exactly bad news, but it's a — It's time to bring the Model S and X programs to an end," Musk said. "We expect to wind down S and X production next quarter. Basically, stop production next quarter."

The Fremont factory will still manufacture Model 3 and Y, but the space where Model S and X are made will instead focus on mass production of its Gen 3 Optimus robots.

"We are delighted that Telsa has announced the Fremont Factory as its chosen location for the new Optimus manufacturing line," Fremont Mayor Raj Salwan said in a statement to CBS News Bay Area. "Tesla's Fremont facility evolving into robotics manufacturing is a vote of confidence in our workforce, supplier ecosystem, and advanced manufacturing base."

According to Tesla, the Gen 3 Optimus is the company's first mass production design, and it is aiming to manufacture a million robots per year in Fremont, with production beginning by the end of 2026.

"This Optimus will really be a general-purpose robot that can learn by observing human behavior," Musk said. "So, you can like demonstrate a task, or literally verbally describe a task, or show it a task, even show it a video, and it will be able to do that task. So, it's going to be a very capable robot."

Musk said the move is part of the company's transition to an "autonomous future."

For current owners of Model S and X vehicles, they can still expect to have support, Musk said, but added that anyone who wants to own one, "Now is the time to order it." 

The Model S and X are exclusively manufactured by the Fremont factory. According to Salwan, they account for about 3% of total models sold, and Model 3 and Y vehicles actually account for most of the factory's output.

"Through production line improvements and operational efficiencies, Tesla expects to maintain current vehicle throughput at Fremont," Salwan said. "As a result, Fremont will remain Tesla's highest-output vehicle factory in North America. 

Musk stated that there are no plans for layoffs at the Fremont factory, and instead, it's possible they hire more workers.

"The City of Fremont looks forward to supporting Tesla's continued growth of both its physical footprint and employment base in Fremont for years to come," Salwan said.