In a single name, Tesla introduced it’s killing the Mannequin S and Mannequin X, has no plans for brand spanking new mass-market fashions, and is pivoting solely to “transportation as a service.” The corporate that revolutionized the auto trade is strolling away from it, not as a result of it failed, however as a result of Elon Musk received bored and located new toys.
What Occurred to Tesla At the moment
When requested if Tesla has plans to launch new fashions to handle completely different worth segments, VP of Car Engineering Lars Moravy gave a telling response:
“You need to begin serious about us as transferring to offering transportation as a service greater than the whole addressable marketplace for the bought autos alone..”
Learn that once more. Tesla’s head of car engineering is telling you to cease pondering of Tesla as an organization that sells automobiles.
Musk doubled down:
“I actually suppose long-term, the one autos that we’ll make shall be autonomous autos.”
He predicted that “most likely lower than 5 % of miles pushed shall be the place someone’s truly driving the automotive themselves sooner or later, perhaps as little as one %.”
After which got here the killing blow: Mannequin S and Mannequin X manufacturing ends subsequent quarter. The Fremont line shall be transformed to fabricate Optimus robots as a substitute.
Lastly, in its newest 10k SEC submitting, Tesla formally up to date its mission to “constructing a world of fantastic abundance” – no matter meaning.
What Tesla is Left With
Let’s rely Tesla’s present car lineup:
- Mannequin 3 — Profitable (however in decline)
- Mannequin Y — Profitable (however in decline)
- Mannequin S — Being killed
- Mannequin X — Being killed
- Cybertruck — Industrial failure, promoting roughly 20 to 25k/yr in opposition to 250k capability
- Tesla Semi — Nonetheless not in quantity manufacturing after years of delays
That leaves Tesla with precisely two profitable car fashions. Two. And there are each in decline.
And as a substitute of constructing on that success, increasing into new segments, addressing affordability, competing with the flood of recent EVs from legacy automakers and Chinese language rivals, Tesla is strolling away.
The USD 25,000 Tesla that Musk promised for years? Scrapped.
New fashions to compete with the likes of the Hyundai, Lucid, Rivian, or the wave of reasonably priced Chinese language EVs? Not coming.
Tesla’s reply to all the things is now the identical: anticipate robotaxis.
The False Selection
Right here’s what makes this so irritating: Tesla didn’t have to decide on.
The corporate might have spun off its AI and robotics efforts right into a separate entity, name it Tesla AI or no matter, whereas preserving Tesla, the automaker, targeted on what it does finest: constructing and promoting nice electrical autos and accelerating the trade’s transition to electrical transport.
Or it might have finished the reverse: spin off the automotive enterprise and let Musk pursue his AI goals with the guardian firm. Both manner, there was no level in letting nice EV packages die.
Tesla might have continued to spend money on electrical autos, leverage its experience in batteries and energy electronics, to speed up EV adoption and stationary vitality storage deployment, and will have licensed “Tesla AI’s” expertise to combine it into its autos.
As an alternative, Tesla is letting a extremely profitable automaker wither so it might chase autonomous robots and robotaxis that will or could not work, could or could not get regulatory approval, and should or could not discover a market.
This can be a firm that delivered 1.6 million autos final yr. That has a world Supercharger community. That has model recognition any automaker would kill for (up till final yr). And it’s being sacrificed on the altar of Musk’s subsequent obsession.
The Numbers Do Not Lie
Tesla’s automotive income declined 10 % in 2025. Deliveries fell 9 %. The corporate misplaced its crown because the world’s largest EV maker to BYD.
The response to those issues? To not repair them by giving extra like to its EV packages, however to desert the enterprise solely.
As an alternative of killing Mannequin S and Mannequin X, Tesla might have introduced the nice issues it did with the Cybertruck, comparable to drive-by-wire and its 800V powertrain, to its packages, however it didn’t trouble.
In the meantime, the “future” Tesla is betting on appears like this:
Robotaxi fleet: About 30-60 autos truly working in Austin, regardless of claims of “effectively over 500”
Optimus robots: Zero doing helpful work in factories, by Musk’s personal admission
CyberCab: About to enter manufacturing with out a steering wheel whereas Tesla nonetheless hasn’t solved autonomy
Tesla is abandoning a enterprise that generated USD 80 billion in automotive income and virtually USD 15 billion in income at its peak for ventures that presently generate primarily nothing.
Through the earnings name, the corporate introduced it can spend a document USD 20 billion in capital expenditure in 2026, and most of it can go into its robotaxi and humanoid robots, in addition to their supporting infrastructure, particularly coaching compute.
In the meantime, Tesla generated lower than USD 6 billion in web earnings (non-GAAP) in 2025 – down 26 % from final yr and greater than 50 % from its peak just a few years in the past.
Electrek’s Take
I’ve coated Tesla for over a decade. I watched this firm show that electrical autos could possibly be fascinating, that they could possibly be worthwhile, that they may compete with and beat the most effective that legacy automakers needed to supply.
And now I’m watching it commit suicide.
There’s a model of this story the place Tesla stays the dominant EV maker whereas additionally pursuing AI and autonomy. The place the corporate launches reasonably priced fashions to compete with Chinese language EVs. The place it expands into new segments. The place it makes use of its manufacturing experience and model energy to really develop its automotive enterprise, and push the trade ahead within the course of, particularly within the US, the place automakers are falling behind the remainder of the world.
Curtis Larimer feedback, “Even when they absolutely resolve autonomous driving in all circumstances, the expertise of calling a taxi, ready, having no management over the route it chooses or the place it drops you off, having to take all the things out of the automotive each time, and plenty of extra inconveniences will make this transportation “service” worse than simply proudly owning a automotive. Uber already exists and it hasn’t meaningfully modified automotive possession”.
As an alternative, we get Lars Moravy telling us to think about Tesla as a “transportation as a service” firm. We get Musk saying the one autos Tesla will make are autonomous ones. We get the Mannequin S and X killed to make room for robots that don’t work but.
Tesla might have had each. It selected to have one, and that would result in neither.
That is Musk becoming a member of the favored “as a service” pattern of the elite, who don’t need folks to personal something and as a substitute have them “subscribe” to as many issues as attainable. It’s a miserable future.
RIP Tesla the automaker. You didn’t should die.
This text is written by Fred Lambert and was first seen on electrek.co.
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