Tesla posts its first-ever annual sales decline in 2025 and confirms the exit of the Model S and Model X as it shifts focus toward AI and robotics.
Tesla entered uncharted territory in 2025. For the first time in its history, the company recorded a year-on-year sales decline, marking a significant shift for the electric vehicle pioneer. Alongside this downturn, Tesla confirmed it will phase out the Model S and Model X, signaling a clear change in strategic direction.
Growth Momentum Slows for the First Time
Financial data released by Tesla shows a noticeable break in its long-standing growth trend. Annual revenue fell from $98 billion in 2024 to $95 billion in 2025, reflecting both softer vehicle demand and reduced government EV incentives in several key markets.
The situation has been further complicated by ongoing public debate surrounding CEO Elon Musk, whose political statements have drawn criticism and added pressure to the brand’s public image.
Flagship Models Are the First to Go
The initial impact of this strategic reset has been felt by Tesla’s longest-standing models. Model S and Model X, once the cornerstone of Tesla’s premium lineup, are set to leave production.
- Model S has been in production since 2012
- Model X followed in 2015, establishing Tesla’s presence in the luxury SUV segment
While both vehicles played a crucial role in shaping Tesla’s identity, the company is now prioritizing higher-volume, more cost-efficient products.
No Surprise for Europe and the UK
For European markets, particularly the UK, the decision brings little immediate change. Both Model S and Model X have been unavailable in right-hand-drive form since 2023, with limited left-hand-drive availability thereafter. The move effectively closes the door on any future reintroduction of these models to the region.
As a result, Tesla’s UK lineup now consists solely of the Model 3 and Model Y.
Cybertruck Still Locked Out of Europe
Tesla’s highly publicized Cybertruck remains absent from European roads. The vehicle does not currently meet regional safety regulations, preventing it from being approved for sale. This further narrows Tesla’s model offering across the continent.
From Cars to Robots
Production capacity previously dedicated to the Model S and Model X at Tesla’s California facility will now be repurposed for the company’s humanoid robotics project, Tesla Optimus. According to Tesla, Optimus is designed to handle tasks that are “unsafe, repetitive or undesirable” for human workers.
This transition underlines Tesla’s ambition to evolve beyond automotive manufacturing and position itself as a broader AI and robotics-driven technology company.
A New Balance for Tesla
Tesla’s current strategy points toward a leaner automotive portfolio supported by technological expansion beyond vehicles. The company is shifting away from low-volume flagship models in favor of scalable platforms, while simultaneously investing in software, artificial intelligence, and robotics.
PistonKafalar Commentary
The retirement of the Model S and Model X marks the end of a defining chapter in Tesla’s rise. These vehicles built the brand’s credibility long before electric cars became mainstream. Yet the 2025 sales decline suggests Tesla is no longer immune to market pressure. Whether this pivot toward AI and robotics strengthens Tesla’s long-term position or dilutes its automotive identity will become clear in the years ahead.