Tesla’s Fremont factory is undergoing a dramatic transformation that signals the company’s shift from electric vehicles to humanoid robotics—though the move comes amid declining car sales and questions about whether the pivot represents innovation or desperation.
The electric automaker will end production of its Model S and Model X vehicles next quarter, according to CNBC. CEO Elon Musk announced during the company’s fourth-quarter earnings call that the factory space will be retooled to manufacture up to one million Optimus humanoid robots annually. “It’s time to basically bring the Model S and X programs to an end with an honorable discharge,” Musk said on the call, adding that anyone interested in purchasing these models should order soon.
A Factory’s Evolution
The decision affects the iconic factory at 45500 Fremont Boulevard, which currently employs over 20,000 people according to Wikipedia. The facility will continue producing Model 3 and Model Y vehicles, which represented 97% of Tesla’s 1.59 million deliveries last year, CNBC reported. But the space currently dedicated to the luxury sedan and SUV will be completely repurposed for robotics manufacturing.
City officials moved quickly to clarify misconceptions about the transition. “To be clear, Tesla is not ending vehicle production at its Fremont factory and reports suggesting otherwise are inaccurate,” Fremont Mayor Raj Salwan said in a statement released Tuesday evening. The city emphasized that Tesla expects to maintain current vehicle throughput through production line improvements and operational efficiencies, keeping Fremont as Tesla’s highest-output vehicle factory in North America.
The Numbers Behind the Pivot
The timing of Tesla’s robotics bet is notable, coming on the heels of the company’s worst financial performance in years. Tesla’s net income plunged 46% in 2025, falling to just $3.79 billion—a fraction of its $12.6 billion peak earnings in 2022, according to NPR. The company also lost its crown as the world’s top EV seller to Chinese automaker BYD, which sold more than 2.25 million battery-powered vehicles in 2025 compared to Tesla’s 1.65 million…