Tesla versus China: why Musk is sending Model S into retirement for robots

Elon Musk has officially announced that the era of Model S and Model X is coming to an end. During the latest investor call, he used the term "honorable discharge," stating that production of these veteran vehicles will be virtually halted in the next quarter. But don't rush to sympathize with old-school fans — this is not a capitulation, but a regrouping of forces.

The Fremont factory, where the company's first serious electric cars were born, is now being completely repurposed for the production of Optimus humanoid robots. Musk is playing for high stakes: according to his forecasts, up to 80% of Tesla's future market value will be brought by robots, not cars. Why is this happening right now?

Simple: the electric vehicle market is turning into a bloodbath with low margins, and robotics is the new "blue ocean." Musk directly acknowledges that the main threat to his ambitions does not come from Ford or Toyota, but from China. Chinese companies are phenomenally good at AI and even better — at mass production.

If we used to debate whose batteries were denser, now the battle is shifting to the realm of anthropomorphic machines. And Chinese automakers have already accepted the challenge.

For an automotive giant, creating a robot is not a leap into the unknown, but a logical expansion of the business. He Xiaopeng, head of Xpeng, directly states that about 70% of modern electric car technology is directly transferred to robotics. Look at the architecture: computer vision systems, decision-making algorithms, and actuators in an autonomous vehicle and an android are practically identical. Tesla uses FSD breakthroughs for the "brain" of Optimus, and Chinese companies are doing the same with their autonomous driving systems. It's the same technological base, just in different form factors.

Chinese players are ramping up at an alarming pace. Li Xiang, CEO of Li Auto, confirmed in a closed meeting that the company will present its own humanoid in the shortest possible time. Chery has already begun deliveries of its first robot Mornine, planning to ship hundreds of units in 2025.

While Tesla is aiming for 2027 as the launch point for public sales, the Chinese are already building supply chains. According to Morgan Stanley estimates, China already controls 63% of the global robotics components market. This is the same lever that once allowed them to capture the solar panel and battery markets.

However, the Chinese side faces a serious internal problem — the so-called "involution." Fierce competition and price wars in the auto market are squeezing everything out of companies. This leads to a paradoxical effect: talented engineers are fleeing major automakers to narrow-specialized robotics startups to escape corporate burnout.

Tesla, despite all the scandals surrounding Musk, remains a magnet for top talent in the US.

The battle for robots will be not only a competition of algorithms, but also a test of which corporate culture can endure this marathon. The transition from wheels to legs is not just a product change, it's an attempt to create a market worth $25 trillion by 2050. For comparison, the auto market is unlikely to show comparable growth in the coming decades. Musk understands that if he doesn't lead this race now, he'll simply be devoured by the same people who are currently dumping on the electric vehicle market. 2027 will be the moment of truth: either Optimus goes mainstream, or the "Chinese robot legion" does to Tesla what BYD did to the Model 3.

The bottom line: Tesla has officially ceased to be an automobile company in its self-perception. Can Musk defeat the Chinese manufacturing machine on its own field, or will Optimus be just another ambitious long-term project?