Elon Musk just killed two of Tesla’s most famous cars to focus on ‘biggest product of all time’

World’s richest person is betting Tesla’s next big product will be an ‘infinite money glitch’

Four years after claiming that Tesla’s Optimus robot would one day be worth more than the company’s car business, CEO Elon Musk has made the biggest move yet to transition away from electric vehicles.

During an investor call on Wednesday, Musk revealed that Tesla would cease production of its Model S and Model X vehicles in order to focus on AI and robotics.

It marks a major shift for Tesla, which is currently the world’s most valuable automotive firm with a market valuation close to $1.5 trillion. It is also one of the most profitable electric vehicle makers; it recently lost its crown to China’s BYD as the world’s biggest EV seller.

Mr Musk’s company has seen two straight years of falling car sales, while recent battery breakthroughs and technological developments have also helped boost BYD’s position as the more dominant company.

Tesla will likely see car sales fall even further with the discontinuation of the Model S and Model X, though it will continue to manufacture and sell the Model 3 and Model Y, which are both higher-volume products that generate far more revenue than older models.

“It’s time to basically bring the Model S and X programs to an end,” Mr Musk said. “We expect to wind down S and X production next quarter.”

The factory used to build the models in Fremont, California, will be converted to manufacture Tesla’s humanoid robot Optimus, which may well be Musk’s biggest bet to date.

Tesla’s sales have been sliding for two consecutive years now (AFP/Getty)

The ‘biggest product of all time’

The bi-pedal humanoid machine is designed to be able to navigate the world in the same way as a human, allowing it to fill everything from manufacturing roles, to customer service positions at hotels and shops.

“Essentially, in the future, physical work will be a choice,” Mr Musk said. “If you want to do it, you can, but you won’t need to do it.”

He has also suggested that the robot could be used to prevent “future crime” by following individuals around like a personal security guard.

“You don’t have to put people in prisons,” he told Tesla shareholders last year. “It’s pretty wild to think of all the possibilities, but I think it’s clearly the future.”

The world’s richest person claimed that Optimus will be the “biggest product of all time, by far” due to its potential to completely transform the economy and society.

“Nothing will even be close,” he said. “I think it will be 10 times bigger than the next biggest product ever made.”

Once scaled, the 54-year-old said the autonomous bot will be an “infinite money glitch” that will account for 80 per cent of Tesla’s value, pushing it towards a $25 trillion market valuation by 2050.

If such ambitions are realised, Mr Musk will be due the biggest pay packet in history, having agreed a $1 trillion bonus if he reaches various targets, which include reaching a company valuation of $8.5 trillion over the next decade.

All this will depend on whether the robot lives up to Mr Musk’s hype.

A Tesla Optimus robot scoops popcorn and waves at attendees during the opening of the Tesla Diner and Drive-In restaurant in California last year (AFP via Getty)

Not everyone is convinced about Mr Musk’s ideas for a general-purpose humanoid assistant, with MIT roboticist Rodney Brooks claiming it will be technologically and economically unfeasible.

“The general plan is that humanoid robots will be ‘plug compatible’ with humans and be able to step in and do the manual things that humans do at lower prices and just as well,” Professor Brooks, who co-founded Roomba maker iRobot, wrote in a September blog post.

“In my opinion, believing that this will happen any time within decades is pure fantasy thinking.”

Rather than robots like Optimus that resemble humans, the robotics pioneer envisions a future where robots take many different forms, each excelling in different roles. Before then, he warns that many billions of dollars will likely disappear in trying to develop robots like the one Mr Musk is betting on.