Tesla is giving the Model S and Model X the ax. Recent sales figures help explain why.

On Tesla's fourth-quarter earnings call, CEO Elon Musk said the company is ending production of its Model S and X vehicles.

The Fremont factory will still manufacture Model 3 and Y, but the space where Model S and X are made will instead focus on mass production of Tesla's Gen 3 Optimus robots.

The carmaker used its quarterly earnings report to describe itself as a 'physical AI company.' So far, investors don't seem rattled by the pivot.

Energy storage products like the Megapack, Megablock, and Powerwall drove

Tesla earnings beat Wall Street's estimates. The stock rose in after hours trading. A call with analysts is scheduled for 5:30 p.m. ET.

Elon Musk said Tesla Inc. needs to build and operate what he is calling a “TeraFab” to manufacture semiconductors, a massive undertaking that will cost billions of dollars and mark another expansion beyond what had been the company’s core electric vehicle business.

Initially, when electric-car maker Tesla ( TSLA 3.45%) released its fourth-quarter results, the stock popped. But shortly after the market opened on Thursday, the stock's return for the day turned negative. This has added to the stock's weakness in recent weeks. As of this writing, the stock is down more than 11% over the past month.