Tesla signals strategic reset with FSD subscription shift and Model S/X exit

Automakers are betting on humanoid robots because they see a rare convergence of industrial capability, AI maturity and applicability in the Physical AI domain, and a potentially massive new addressable market

Tesla is sending a clear message to investors, and the broader mobility ecosystem — the company’s next growth chapter will be driven less by premium vehicle volume and more by recurring software revenue and long-horizon AI and robotics bets. Two moves underline this shift: transitioning Full Self-Driving (FSD) to a subscription-only model and planning to wind down Model S and Model X production by the end of the second quarter of 2026, freeing capital and focus for newer platforms, including robotics. “We are going to take the Model S and X production space in our Fremont factory and convert that into an Optimus factory … with the long-term goal of having 1 million units a year of Optimus robots in the current SX space in Fremont,” Elon Musk said. In 2024, Musk stated that Optimus has the potential to turn Tesla into a $25 trillion company — well above its current market capitalization of around $1.4 trillion. In 2025, he also indicated that humanoid robots could ultimately account for roughly 80% of Tesla’s overall valuation.