Tesla starts Optimus production as quarterly profit falls 43%

Tesla has started producing its Optimus humanoid robot at a Fremont, California plant that once built electric vehicles, the company said Wednesday. In its third-quarter shareholder letter, Tesla wrote: “The bots coming off this line are the first production-quality bots that we have manufactured.”

CEO Elon Musk described the milestone on a call with investors as “early production,” warning the ramp-up would be slow and uneven given how novel the product is. He said Tesla aims to reach a production rate of 20,000 Optimus units per week by the end of 2027, though he cautioned the design still needs adjustments to make the robot durable enough for long-term use and that substantial AI work remains before it can handle open-ended tasks reliably.

That progress wasn’t enough to offset a mixed quarter. Tesla’s revenue stayed roughly flat while spending on Optimus, AI, and autonomous driving surged, pushing net income down 43% to $787 million from $1.37 billion a year earlier; lower regulatory-credit sales added further pressure. Vehicle revenue held flat year over year at $20 billion as the company delivered 486,532 vehicles, up slightly from the prior quarter but down from the same period last year. Total revenue of $28.04 billion came in just below both the year-ago quarter and the prior quarter. Energy and storage revenue dropped 16% year over year to $2.8 billion on tariff-related refunds, while the services business — including Full Self-Driving subscriptions — grew 33% to $4.6 billion, and its gross profit hit a record $734 million for the quarter.

Executives stayed bullish on FSD even as the fully unsupervised version slipped again; Musk had said in April that it would probably arrive by the end of this year. Today’s software only supports supervised driving that still requires an attentive driver. Ashok Elluswamy, Tesla’s vice president of AI software, said the company expects to start enabling unsupervised driving for some customer vehicles around the second quarter of next year, bringing them into the robotaxi fleet.

Why it matters

Optimus has moved from demo to a real production line, but Tesla’s own numbers show the AI and robotics bet is currently a drag on profitability — and its self-driving timeline keeps slipping even as the company leans on robotaxis for future growth.