Here's Why Tesla Is Discontinuing the Model S and Model X

By Lee Samaha – Feb 21, 2026 at 1:38AM ESTKey PointsTesla is shifting its focus toward autonomous driving in line with its long-term aims. Losing the Model S and Model X won't materially impact sales. Autonomous vehicles are the future of the EV industry. We’re bullish on these 10 stocks ›NASDAQ: TSLATeslaMarket Cap$1.5TToday's Changeangle-down(-0.01%) $0.02Current Price$411.69Price as of February 20, 2026 at 3:58 PM ETThe recent developments are more part of an evolutionary strategy rather than a reaction to events.Tesla's (TSLA 0.01%) announcement that it was discontinuing production of its Model S and Model X surprised the market and caused many investors to conclude that Tesla was walking away from the electric vehicle (EV) arena. In fact, that's far from the truth, and the reality is much more nuanced. Here's why Tesla is ending production of two of its EVs.

What Elon Musk said On a recent earnings call, CEO Elon Musk explained the decision by saying, "we're really moving into a future that is based on autonomy." This fits with Tesla's goals, but it's important to understand the full context. Image source: Tesla. First, the S and X are higher-cost models that don't generate significant sales for Tesla. The company doesn't break out its sales in its delivery reports. Instead, it lumps them in "other models" deliveries, but since "other models" only generated 12,881 unit deliveries in the fourth quarter, compared to Model 3/Y deliveries of 323,800, it's fair to say they are not significant. According to the Kelley Blue Book Electric Vehicle Sales Report, they totaled just over 4,000, representing 1.2% of deliveries in the quarter. Second, while Model 3 sales rose modestly in 2025 and Model Y sales were negatively affected by the spring refresh, Model S/X sales fell significantly. It's clear from the recent massive charges and EV strategy changes at Ford Motor Company and Stellantis that the market has moved toward lower-cost models. Indeed, Tesla has also responded by producing lower-cost, standard models of the 3 and Y. Third, as part of a $20 billion capital spending commitment in 2026, Tesla is converting space at its Fremont factory used to produce the S and X to manufacture its Optimus robot. ExpandNASDAQ: TSLATeslaToday's Change(-0.01%) $-0.02Current Price$411.69Key Data PointsMarket Cap$1.5TDay's Range$405.50 - $414.6852wk Range$214.25 - $498.83Volume3.4MAvg Vol67MGross Margin18.03% An autonomous future As Musk noted, Tesla is driving toward an autonomous future. This is not some sort of diversionary or reactive tactic by the company. Instead, it's an inevitable consequence of where many automakers tried to take the industry. The difference is that, unlike General Motors and Ford (which spent billions failing to develop robotaxis), Tesla is progressing, albeit slowly, toward achieving autonomous robotaxis. Given the relatively higher upfront cost but significantly lower cost-per-mile dynamics of EVs, their killer benefit is their heavy use, which shines through when they are used as taxis. That benefit is even better if they are autonomous and offer a more affordable price point, as the dedicated robotaxi vehicle, Cybercab, aims to do. Image source: Getty Images. Cybercabs, not high-upfront-cost luxury models Putting it all together, the ongoing production of low-selling, high-priced luxury EVs such as the S and X aligns with neither market conditions nor the direction the EV market is heading. As such, discontinuing these models is a natural evolution of the business. That's not to say Tesla will necessarily achieve its robotaxi aims, but the lack of S and X models won't impact that question much.Read NextFeb 18, 2026 •By Daniel Sparks1 Reason Why Tesla Stock May Keep UnderperformingFeb 17, 2026 •By Daniel SparksHere Comes Tesla's First Vehicle Without a Steering Wheel: Will There Be Enough Demand?Feb 15, 2026 •By James BrumleyHere's Why Tesla Is Now Diving Headfirst All the Way Into Robots, Solar, Robotaxis, and MoreFeb 14, 2026 •By Patrick SandersPrediction: Tesla's Optimus Robot Will Transform the Stock by the End of 2026Feb 12, 2026 •By Eric VolkmanShould You Buy the Dip on Tesla?Feb 12, 2026 •By Daniel Miller3 Investor Takeaways From a Ranking of the Best New Vehicles of 2026About the AuthorLee Samaha is a contributing Stock Market Analyst at The Motley Fool covering industrials, electricals, energy, materials, transportation, and infrastructure stocks. Prior to The Motley Fool, Lee was a Civil Engineer and Investment Manager. He holds a Bachelor of Civil and Structural Engineering from Southampton University and a Certificate in Investment Management from Chartered Institute for Securities & Investment. Lee first cut his investing teeth on The Motley Fool bulletin boards (commonly referred to as the “Fool Boards,”) and he’s infinitely grateful to all of the investors he learned from in this powerful investing community.TMFSaintGermainX@LeeSamahaStocks MentionedTeslaNASDAQ: TSLA$411.69 (0.01%) $0.02Ford Motor CompanyNYSE: F$14.01 (+1.63%) $+0.23General MotorsNYSE: GM$81.42 (0.06%) $0.05StellantisNYSE: STLA$7.74 (+3.00%) $+0.23*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.