According to Musk, "it's time to essentially conclude the Model S and X programs," which he stated during a conference call with investors.
Production of the Model X crossover and the Model S sedan will be halted in the next quarter, he clarified.
The Fremont factory in California will be retooled to produce Optimus robots instead of electric vehicles.
Additionally, Musk reported a 3% decrease in Tesla's overall revenue in 2025 and a 61% drop in profit over the last three months of the current year.
Moreover, the Chinese company BYD has overtaken Tesla and is now the leading manufacturer of electric vehicles in the world.
Musk also noted that his political activity has negatively impacted Tesla's customer base, which has manifested in protests at the company's dealerships in various countries.
The abandonment of the previous strategy focused on electric vehicles coincides with U.S. President Donald Trump's decision to cut government support programs for electric vehicles.
Tesla, once considered one of the most profitable automakers, is increasingly focusing on the development of robotaxis.
At the investor meeting, Musk also discussed a $2 billion investment in his own artificial intelligence startup, xAI.
"Many investors have asked us about this," he said, commenting on Tesla's decision to invest in xAI. "They believe we should invest in this company, and we are simply fulfilling the wishes of our shareholders."
This decision was made despite the fact that in the last shareholder vote, the majority abstained or voted against the proposal.
Last year, shareholders unanimously supported a record compensation package for Musk, valued at nearly $1 trillion, on the condition that he significantly increases Tesla's market capitalization over the next 10 years.
Musk added that the company plans to significantly increase its expenditures, which could reach $20 billion.
"Next year, we expect major capital expenditures. We are making significant investments for an exciting future," he noted.
In light of this news, Tesla's shares rose about 2% in after-hours trading.
Analysts note that the shift in the company's business direction comes amid the obsolescence of its electric vehicle lineup.
"The Model S and Model X have long become low-volume models for Tesla," said Jessica Caldwell, head of analytics at Edmunds, in an interview with the BBC. She added that it makes sense to focus on more mass-market models like the Model 3 and Model Y, as well as other areas of business expansion.
