Tesla has made it evident: It is no longer simply an automotive manufacturer

Tesla’s Bold Shift Toward Autonomy

Elon Musk, CEO of Tesla (TSLA), declared during the company’s Q4 earnings call that the company is rapidly advancing into an era defined by autonomous technology.

This announcement signals a pivotal transformation for Tesla, as it moves away from its traditional identity as an automaker and embraces a future centered on artificial intelligence and autonomy.

From Electric Vehicles to AI-Driven Innovation

Tesla is phasing out some of its most iconic electric vehicles, making way for a new generation of self-driving cars, robotaxis, and humanoid robots.

“The Tesla you once knew no longer exists,” wrote George Gianarikas, an analyst at Canaccord Genuity. “Elon Musk has reached a decisive turning point, fully committing to a vision that allows no retreat.”

Alex Potter from Piper Sandler echoed this sentiment, noting that Tesla is “burning the boats” and staking its future on autonomous vehicles and robotics.

A New Chapter for Tesla

To fuel its next phase of growth, Tesla is establishing six new production lines dedicated to innovative products like the Cybercab robotaxi and Optimus robots.

This evolution also means saying goodbye to two of Tesla’s flagship models—the Model S and Model X. Musk explained, “It’s time to respectfully retire the Model S and X programs as part of our broader transition to autonomy.”

The Model S, a luxury electric sedan, was a game-changer when it debuted in 2012, helping to establish Tesla’s reputation in the EV market.

Dan Levy, an analyst at Barclays, remarked, “While automotive sales remain central for now, the discontinuation of S/X represents a symbolic handoff from traditional vehicles to Tesla’s new focus on physical AI.”

Lars Moravy, Tesla’s VP of vehicle engineering, described this as a shift from selling cars to offering transportation as a service, expanding beyond just vehicle sales.

Full Self-Driving and Robotaxis: The Road Ahead

The future, according to Tesla, is not about driving your own car, but being driven by it. For the first time, Tesla announced it has 1.1 million paying subscribers for its Full Self-Driving (FSD) service.

Analyst Jed Dorsheimer of William Blair noted, “FSD subscriptions, now a key performance metric for Musk, have reached 1.1 million active users, growing 38% year-over-year—outpacing the 22% growth in total vehicle deliveries.”

Tesla is fully committed to expanding FSD, aiming to activate the software in as many vehicles as possible. The company now offers FSD exclusively as a subscription and is selling more affordable models, such as the standard Model 3 and Model Y, to broaden its customer base.

These vehicles could soon join Tesla’s envisioned robotaxi network, a long-standing goal for Musk. Currently, around 500 robotaxis operate in Austin and the San Francisco Bay Area, with plans to accelerate the removal of safety drivers.

Moravy added, “Tesla is building out infrastructure to stay ahead of the demand for robotaxis and autonomous vehicles. Our network positions us as the only company capable of scaling rapidly enough for the coming wave of autonomy.”

This year, Tesla intends to launch operations in seven new regions and aims to double its robotaxi fleet every month. Dorsheimer predicts, “By April, Tesla will catch up to and quickly surpass Waymo’s 2,000-vehicle fleet.”

Even the Cybertruck, Tesla’s latest and most controversial model, may be transformed into a fully autonomous delivery vehicle. Musk explained, “We plan to transition the Cybertruck line to full autonomy, targeting local cargo delivery within cities—a significant market opportunity.”

Optimus: Tesla’s Leap into Robotics

While autonomous Cybertrucks are impressive, Musk’s most ambitious bet is on Optimus, Tesla’s humanoid robot.

According to Dorsheimer, “Swapping out the S and X for Optimus could multiply revenue by eight times. While those vehicles generated about $3 billion, Optimus sales could be far greater.”

He estimates that even if Tesla produces 500,000 Optimus units annually at an average price of $50,000, that would generate $25 billion in revenue—a clear rationale for the company’s strategic pivot.

Tesla is preparing to unveil the highly anticipated Optimus Gen 3 model this quarter, with mass production targeted before the end of 2026 and a goal of reaching one million units per year.

Such bold ambitions are characteristic of Musk. He envisions a future where labor is essentially free, thanks to widespread robotics, benefiting society as a whole.

“With the continued advancement of AI and robotics, I believe we’re heading toward a future of universal high income—not just a basic income, but a high one,” Musk stated during the call.

Dan Ives of Wedbush outlined the outlook for investors, suggesting that Tesla could reach a $2 trillion market cap by early 2026, and potentially $3 trillion by year’s end, as the company’s AI-driven strategy takes hold.

Regardless of Musk’s grand visions, the primary objective for Tesla shareholders remains company growth and increasing stock value.

That’s why Tesla’s next chapter is focused on autonomy and robotics, leaving its car-making roots behind.