The Nexus line did exactly what it was supposed to do. It was meant to push an idealistic vision of what Android phones were supposed to be onto the market at a (too) competitive price point to force other Android manufacturers to follow suit.
A few years down the line, consumers have flocked to Android in large numbers, so now it's time to appease other phone manufacturers and guard the bottom line by discontinuing the Nexus line which ran at a loss.
Wasn't that the same idea with Microsoft's Surface device line-up? Windows hardware used to be hot garbage when compared to Apple hardware, but manufacturers have since stepped up their game. But instead of killing the Surface line, Microsoft have doubled down on it.
A few years down the line, consumers have flocked to Android in large numbers, so now it's time to appease other phone manufacturers and guard the bottom line by discontinuing the Nexus line which ran at a loss.