Tesla ends Model S and Model X production to convert Fremont factory for Optimus manufacturing

Tesla announced on its Q4 2025 earnings call that it will end production of the Model S and Model X and repurpose those factory lines at its Fremont, California facility to manufacture the third generation of Optimus, its humanoid robot, targeting a production capacity of one million units per year. A second manufacturing programme is being prepared at Gigafactory Texas, designed for a long-term annual capacity of ten million robots and spanning 5.2 million square feet.

Fremont is not an ordinary factory. Tesla acquired it in 2010 from Toyota and General Motors, which had operated it jointly as NUMMI before abandoning it during the financial crisis. It was the facility where Tesla proved it could manufacture vehicles at scale; every Model S ever built came off that floor. The last Model S and Model X vehicles will be produced in early May 2026, ending a fourteen-year production run for the Model S and eleven years for the Model X. Tesla will continue producing the Model 3 and Model Y at Fremont, but the conversion of the S and X lines to Optimus represents the most consequential single bet in the factory's history.

Optimus began publicly in September 2022 at Tesla's AI Day, where the first reveal was a person in a robot suit dancing on stage, followed by a crude walking prototype. Musk framed it then as a longer-term project. The Gen 2 prototype revealed in late 2023 showed meaningful hardware progress: a 30% improvement in walking speed, a ten kilogram reduction in weight, and new hands with eleven degrees of freedom and tactile sensing. Internal Tesla deployments began through 2024 and into 2025 for pick-and-place and tote-handling tasks. Gen 3 hands production started at Fremont in February 2026, and Tesla officially said Gen 3 mass production commenced in January 2026.

Musk described Optimus as requiring a completely new supply chain; "there's really nothing from the existing supply chain that exists in Optimus," he said on the earnings call. That is a meaningful engineering and procurement admission. Tesla's automotive manufacturing advantage is its vertically integrated production system and its supplier relationships; neither transfers to humanoid robotics. Building a million-unit production line for a product with no existing supply chain, no regulatory framework, and no proven autonomous operation is the core execution challenge the company is taking on.

Every major Optimus production target since 2022 has been missed. In 2022, Musk said Optimus would be production-ready by 2023. In 2023, he said thousands would be in factories by year end; Gen 2 had not yet been revealed. In January 2025 he projected several thousand units in 2025 and ten thousand per month by mid-year; actual output through 2025 was in the hundreds, a miss Musk acknowledged on the Q2 2025 earnings call. He confirmed in January 2026 that Optimus units are not yet performing useful autonomous work. The Gen 3 prototype reveal, originally targeted for Q1 2026, was pushed to late summer 2026 for finishing touches, confirmed on the Q1 2026 earnings call in April.

The gap between stated targets and demonstrated progress is the central question, not a peripheral note. Musk stated in September 2025 that 80% of Tesla's future value will come from Optimus and AI rather than vehicles. Wall Street projects negative free cash flow of $5.19 billion for Tesla in 2026, a figure the company is tolerating specifically in anticipation of Optimus revenue returns. Cortex 2.0, Tesla's training supercomputer for Optimus, began coming online in phases from April 2026. Consumer availability is targeted by end of 2027 per Musk's January 2026 Davos statement, with that timeline resting on a chain of milestones beginning with productive factory deployment at Fremont in Q2 to Q3 2026.

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