Tesla has begun production of its Optimus humanoid robot at its Fremont, Calif., factory in a manufacturing space formerly dedicated to making electric vehicles, the company announced Wednesday.
“The robots from this line are the first production-quality robots we have manufactured,” Tesla wrote in its third-quarter letter to shareholders. “While we continue to iterate on the hardware and manufacturing process, we have proven that Optimus’ current manufacturing process is suitable for a commercial product.”
Tesla CEO Elon Musk said in a conference call that he considered this “early production” and that the ramp would be slow and “somewhat bumpy because this is a radically new product.” He nevertheless affirmed that Tesla would be able to manufacture 20,000 per week by the end of 2027.
“There are still some things we need to refine regarding the design, because you need to provide a robot that is safe and reliable and has a long lifespan, so it can’t wear out after a month,” he said. “And there’s still a lot of work to be done in terms of the AI and the robot for it to be really useful for open-ended tasks.”
This forward-looking move wasn’t enough to lift the company’s otherwise lackluster third-quarter earnings, results that typify a company midway through a major gamble. Tesla’s revenues remained steady and its expenses soared as it stepped on the accelerator on its Optimus robots, AI and autonomous driving. The end result was a 43% drop in profits.
The company’s revenue was largely driven by electric vehicle sales, which remained flat year over year at $20 billion. Tesla delivered 486,532 vehicles in the third quarter, about 6,000 more than the previous quarter, but fewer than the same period last year.
Tesla’s total third-quarter revenue was $28.04 billion, slightly lower than the $28.09 billion generated in the third quarter of 2025. Tesla’s third-quarter revenue was also about $200 million lower than the previous quarter’s $28.23 billion.
Tesla saw a 16% year-over-year decline in its solar and energy storage business, to $2.8 billion, driven by rate-related customer refunds. There has been some positive revenue growth in its services business, a category that includes customer subscriptions to its advanced driver assistance software Full Self-Driving. Tesla’s services business grew 33% year over year, bringing in $4.6 billion.
None of this was enough to outpace Tesla’s spending on artificial intelligence projects and its Optimus robot, which significantly cut into profits.
The company reported net income of $787 million, a 43% decline from the same period in 2025, when it earned $1.37 billion. Declining sales of regulatory credits also put pressure on its profitability. The company remained positive largely due to strong growth in its services and other segment, which generated a record gross profit of $734 million for the quarter.
This story has been updated with information from Tesla’s quarterly conference call.
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