Tesla begins production of Optimus humanoid robot as Q3 profits fall 43%

Company’s revenue flat, expenses rise on AI and robot investments

By LineZotpaper

Published21 October 2026

Updated21 October 2026

Read Time2 min

Sources3 outlets

Tesla has started production of its Optimus humanoid robot at its Fremont, California factory, the company announced Wednesday, even as third-quarter earnings showed a sharp drop in profits due to heavy spending on artificial intelligence and the robot project. Total revenue was flat at $28.04 billion, while net income plunged 43% to $787 million.

Tesla said the robots coming off the line in Fremont are the first production-quality units it has manufactured. The company wrote in its third-quarter shareholder letter that while it will continue to iterate on the hardware and manufacturing process, it has proven that the current manufacturing process for Optimus is suitable for a commercial product.

CEO Elon Musk described the effort as “early production” and warned that the ramp would be slow and “somewhat bumpy because it is such a radically new product.” He claimed the company would be able to make 20,000 Optimus robots per week by the end of 2027. However, he also acknowledged significant work remains, saying “there’s still quite a lot of work to do with regard to the AI and the robot for it to be truly useful for open-ended tasks.”

Tesla’s push into Optimus and autonomous driving weighed on its bottom line. The company delivered 486,532 vehicles in the quarter, about 6,000 more than the previous quarter but fewer than the same period last year. Automotive revenue was flat at $20 billion. The energy storage and solar business fell 16% year-over-year to $2.8 billion, which Tesla blamed on tariff-related customer refunds. The services segment, including Full Self-Driving subscriptions, grew 33% to $4.6 billion, providing a record $734 million in gross profit that helped the company stay in the black.

Lower regulatory credit sales also pressured profitability, the company said.

Analysis

Why This Matters

Tesla is making a high-risk bet on humanoid robots and AI, diverting resources from its core EV business at a time when EV sales growth is stagnating.
The start of Optimus production marks a milestone, but commercial viability and safety remain unproven, and the profit drop may unsettle investors.
The ramp to mass production will determine whether Optimus becomes a meaningful revenue stream or a costly experiment.

Background

Tesla first unveiled the Optimus concept in 2021 and has since developed prototypes. The company has framed the robot as a long-term growth driver, alongside autonomous driving and energy storage. The Fremont factory previously housed EV manufacturing lines that have been retooled for robot assembly. The Q3 2026 results come amid broader industry challenges, including global EV demand softening and tariff disruptions.

Key Perspectives

Tesla: The company argues that Optimus represents a transformative product and that early production proves the manufacturing process is viable for a commercial product. It sees robot and AI spending as necessary investments for future leadership. Investors: While Tesla points to long-term potential, the 43% profit drop and flat revenue may prompt concerns about near-term returns, especially as EV sales remain subdued. Critics/Skeptics: Musk himself noted the robot’s AI needs more work for “open-ended tasks” and that safety and reliability challenges remain. The 2027 production target of 20,000 units per week is highly ambitious and may face technical and regulatory hurdles.

What to Watch

How quickly Tesla ramps Optimus production in coming quarters and whether early units are deployed to external customers.
Tesla’s next quarterly earnings: whether profits stabilize or decline further as spending continues.
Any regulatory or safety incidents involving Optimus that could slow adoption.

Sources

Tesla has begun production of its Optimus humanoid in California · All Content from Business Insider
Tesla starts Optimus robot production in California as profit falls 43% · TechCrunch
Tesla profits drop 43% in Q3 · Ars Technica - All content

Checked

12 claims in this story checked against 1 source: 12 supported.

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SupportedTesla has begun producing Optimus at its Fremont factory.TechCrunch: “Tesla has started production of its Optimus humanoid robot at its factory in Fremont, California”
SupportedTesla’s third-quarter profits fell 43%.TechCrunch: “The end result was a 43% drop in profits.”
SupportedMusk described the effort as “early production.”TechCrunch: “Tesla CEO Elon Musk said on a conference call that he considers this “early production,””
SupportedMusk said the production ramp would be slow and “somewhat bumpy because it is such a radically new product.”TechCrunch: “and that the ramp will be an slow and “somewhat bumpy because it is such a radically new product.””
SupportedMusk claimed Tesla could make 20,000 Optimus robots per week by the end of 2027.TechCrunch: “He nonetheless claimed Tesla will be able to make 20,000 of them per week by the end of 2027.”
SupportedMusk said substantial work remained for the robot to be useful for open-ended tasks.TechCrunch: ““And there’s still quite a lot of work to do with regard to the AI and the robot for it to be truly useful for open-ended tasks.””
SupportedTesla’s third-quarter revenue was flat at $28.04 billion.TechCrunch: “Tesla’s total third-quarter revenue was $28.04 billion, a skosh below the $28.09 billion it generated in the third quarter of 2025.”
SupportedTesla reported $787 million in net income, down 43%.TechCrunch: “The company reported $787 million in net income, a 43% drop from the same period in 2025 when it earned $1.37 billion.”
SupportedSpending on AI and Optimus weighed on Tesla’s profits.TechCrunch: “None of this was enough to outpace Tesla’s spending on artificial intelligence projects and its Optimus robot, which took a big bite out of profits.”
SupportedTesla delivered 486,532 vehicles in the quarter, about 6,000 more than the previous quarter but fewer than the same period a year earlier.TechCrunch: “Tesla delivered 486,532 vehicles in the third quarter, about 6,000 more than the previous quarter, but fewer than in the same period last year.”
SupportedTesla’s solar and energy storage business fell 16% year over year to $2.8 billion, which the company blamed on tariff-related customer refunds.TechCrunch: “Tesla saw a 16% year-over-year drop in its solar and energy storage business to $2.8 billion, which it blamed on tariff-related customer refunds.”
SupportedTesla’s services business, which includes Full Self-Driving subscriptions, grew 33% year over year to $4.6 billion.TechCrunch: “Tesla’s services business grew 33% year-over-year, bringing in $4.6 billion.”