On January 29, 2026, Tesla CEO Elon Musk announced that capital expenditures in 2026 would be "very large"; the Model S and Model X programs would be terminated.
In 2025, Tesla's total deliveries were approximately 1.6 million vehicles, with "Other Models," including Model S/X, accounting for just over 50,000 units, a volume that has become marginal.
The Model S and Model X once defined Tesla's early concept of "high-end electric vehicles." In the context of traditional car manufacturers, terminating these projects would be equivalent to Mercedes-Benz abandoning its S-Class or BMW discontinuing its 7 Series.
This is also to make way for future humanoid robots.
Elon Musk revealed that after transforming Tesla's Fremont, California Model S/X production line into an Optimus production line, its robot production will reach 1 million units per year.
It's worth noting that Musk also announced that the new generation Roadster will debut in April.
This product, whose concept and pre-order plan were first announced in 2017, has been revived after nearly a decade of delays and silence. It's more of a re-demonstration of extreme performance and technological symbolism, and its high price is unlikely to be relevant to mass-produced product tiers.
This reflects not the success or failure of a single product, but rather a clear definition of the enterprise's business logic.
Flagship car retires.
When Model S and Model X were born, electric vehicles were still in the position of "technology demonstrators."
For each dimension—battery life, performance, intelligence, and design—a benchmark product is needed to shatter market prejudices.
In this sense, the role of the S/X is more like an industrial education tool.
Their mission is not to achieve high sales volume, but to prove that electric vehicles can be faster, smarter, and more futuristic than gasoline cars.
Ten years later, this task is no longer scarce.
In the high-end electric vehicle market, traditional luxury brands have completed their electric transformation, while new players are building their own premium narratives, and consumers have long moved past the perception that "electric equals low-end."
When the demonstration significance fades, flagship vehicles must be evaluated from a more realistic perspective, namely, their position within the company's scale, cost structure, and technology flywheel.
From a manufacturing perspective, the S/X and Model 3/Y represent two different generations of product philosophy.
The former was born during a period when Tesla was still focused on engineering breakthroughs, initially featuring a complex platform, high customization, and a fragmented component system.
The latter is built for automation, cost reduction, and global replication, with a strong emphasis on platforms.
When a company's growth engine shifts from technological leadership to the pursuit of scale efficiency, complexity becomes a system cost.
The annual sales of the S/X models, along with the Cybertruck and Semi, have been grouped into the "Other" category in Tesla's disclosures. Compared to the million-unit scale of the Model Y alone, they no longer hold priority in resource allocation.
From a capital efficiency perspective, is it better to invest the same engineering team, production line resources, and supply chain bargaining power in low-volume, high-complexity flagship models, or in a mainstream platform that can continuously scale up volume and data?
Tesla, accustomed to first-principles thinking, clearly favors the latter.
2. Debranding, Efficiency Centers and Challenges
Traditional automakers operate brand structures.
Entry-level models are responsible for volume, mid-to-high-end models are responsible for profit, and flagship models are responsible for the ceiling and premium pricing. Even with limited sales, flagship vehicles remain the linchpin of the entire pricing system.
Tesla is more like operating an efficiency system, encompassing manufacturing efficiency, supply chain integration capabilities, software and data scale, automation levels, and potential future platform-based businesses.
In this structure, a product's value is reflected not only in its gross margin but in its ability to amplify the system's scale effect.
Model 3/Y serves as the data entry point, manufacturing platform, and core node for global supply chain replication; in contrast, the S/X models, which struggle to achieve significant scale, offer limited contribution to the flywheel's rotational speed.
This isn't surprising given Tesla's external narrative.
Autonomous driving, computing power platforms, energy systems, and humanoid robots are beginning to replace "next-generation vehicles" as the core variables attracting attention in the capital market.
From "selling hardware" to "operating platforms and systems" is a typical industrial leapfrog story.
Within this framework, the symbolic meaning of flagship luxury cars is merely superficial; they neither significantly contribute to data scale nor serve as a large-scale testing ground for new technologies. Instead, they consume engineering resources and production line space.
From an internal corporate perspective, this is not merely a product line adjustment, but a reallocation of resources.
Abandoning a flagship product line is not without its consequences.
On the one hand, Tesla's brand anchor in the high-end market will be weakened.
When the pricing system is no longer supported by "ceiling models," the pressure on mid-range products in a price war will be exposed more intensely than in the traditional luxury car system.
On the other hand, the pace at which future narratives are realized is inherently uncertain.
Autonomous driving and robotics are long-cycle technology paths. If commercialization progress slows down, the valuation logic of companies will still be pulled back to the reality framework of "selling cars as the main business."
In this situation, without a high-end product line to serve as a profit buffer, cyclical fluctuations will be more directly reflected in the financial statements.
From an industry perspective, the discontinuation of the S/X is more like Tesla's renewed statement of its own positioning.
It has long ceased trying to be a car group with a complete brand hierarchy, and is instead determined to bet on becoming an industrial technology company with manufacturing as its foundation and AI and automation as its superstructure.
Success means a new species; failure, however, means returning to the competitive logic of the automotive industry, and re-undergoing the scrutiny of scale, cost, and cycle.
