Tesla (NASDAQ: TSLA) announced a significant shift in strategy, planning to halt production of the Model S and Model X at its Fremont factory to focus on developing Optimus robots. The company aims to launch limited sales of these robots by the end of 2026 and ramp up production to 1 million units annually starting in 2027, with a projected sales price of $30,000 per robot, potentially generating $30 billion in annual revenue.
The transition will see Tesla’s higher-cost Model S and X, which accounted for less than 3% of automotive sales in 2025, replaced by more profitable models, such as the Model Y and Model 3. Sales of the S and X fell by 50% and 30% respectively, while total automotive sales dropped in the low double digits. Initial impacts from this strategy include increased capital expenditures and margin impairment, with the possibility of extended cash burn before achieving significant revenue from the Optimus robots.
Investor sentiment remains mixed, as reflected in 16 analyst revisions shortly after the announcement. Price targets for TSLA stock have varied, with the consensus at a hold. Analysts have expressed concerns that continued low institutional ownership and stock performance challenges could cap gains, with critical support levels being closely monitored.
