Tesla ditches two popular models for robots and AI – but are customers paying the price?

Tesla is pulling back from the cars that helped define the brand, betting instead on robots and artificial intelligence (AI). This shift is raising fresh concerns about whether the electric carmaker is losing focus on the people who actually buy its vehicles.

The electric car company revealed this week that its annual revenue fell for the first time, down 3% in 2025, while profits plunged 61% in the final quarter of the year.

At the same time, the car firm run by Elon Musk announced that it will stop making its premium Model S and Model X cars. The California factory that built those cars will instead be used to manufacture Tesla’s humanoid robot, Optimus – a product that is not yet available to buy.

For everyday drivers, the move signals a company increasingly prioritising future tech endeavours rather than today’s car buyers.

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Is this a gamble as competition heats up?

Tesla’s shift comes at an awkward time. In January, China’s BYD overtook Tesla as the world’s largest EV maker. This highlights how crowded, and competitive, the electric car market has become.

Experts also warn that ending the Model S and X will narrow consumer choice even further, leaving US buyers with essentially two mainstream options: the Model 3 and Model Y. “That makes sense on a spreadsheet, but from a consumer perspective it’s another sign Tesla isn’t prioritising drivers looking for something new,” said one auto industry analyst.

One thing to bear in mind is that new Model S and Model X’s haven’t been available in the UK for some time, so this won’t have much impact on your choices.

Robots, AI, and confused shareholders

Tesla is also ploughing money into ventures far removed from car manufacturing. The company disclosed a $2bn (£1.45bn) investment in Musk’s AI firm, xAI, even though a recent shareholder vote showed more opposition and abstentions than support for the idea. Around 38% voted in favour, 33% voted against, and a notable 17% of shareholders abstained from voting, according to recent filings.

“A lot of investors asked us to do this,” Musk argued, despite the vote suggesting a clear lack of backing.

For car buyers, the concern is whether Tesla’s cash is being deterred away from improving vehicles, service networks and charging infrastructure – areas where customers regularly complain of long waits and inconsistent quality.

The car firm is also planning to ramp up spending by as much as $20bn (£16bn), with Musk promising “big investments for an epic future”. What the future looks like for car buyers, however, remains unclear.

Is betting on the future neglecting the present?

Tesla insists its future lies in robotaxis, AI and robotics – markets that economists argue could one day be lucrative. But business critics warn the company risks repeating a classic business mistake: neglecting its core product before its next big thing is ready.

Shares in Tesla rose to 2% following Musk’s announcement, suggesting investors are willing to give the billionaire tycoon the benefit of the doubt. Consumers, however, may be less patient.

For a company built on disrupting the car industry, the biggest risk for Tesla now may be forgetting why drivers chose its cars in the first place.

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