Tesla Starts Optimus Robot Production in California as Profit Falls 43%
Tesla announced commercial-grade production of its Optimus humanoid robot, but heavy AI and robotics spending caused a 43% drop in Q3 net profit.
U.S. electric vehicle maker Tesla announced on Wednesday, October 21, 2026, that it has started production of its Optimus humanoid robot at its factory in Fremont, California, utilizing a manufacturing space previously dedicated to electric vehicles. In its third-quarter letter to shareholders, Tesla stated, “The bots coming off this line are the first production-quality bots that we have manufactured.” The company noted that while hardware and manufacturing processes continue to iterate, they have proven the current process is suitable for a commercial product.
This milestone comes with significant financial pressure. Tesla CEO Elon Musk described this as “early production” during the earnings call, warning that the ramp-up will be slow and “somewhat bumpy because it is such a radically new product.” He claimed Tesla could reach 20,000 units per week by the end of 2027, but acknowledged ongoing needs to tweak design for safety, reliability, and longevity, as well as substantial work required in AI to make the robot truly useful for open-ended tasks.
Aggressive investment in AI and robotics directly impacted short-term profitability. According to TechCrunch reporting and Tesla’s disclosures, third-quarter revenue remained flat at $28.04 billion, slightly below the $28.09 billion generated in the same period last year. However, net income fell to $787 million, a 43% drop from $1.37 billion in the third quarter of 2025, driven by skyrocketing expenses for Optimus robots, AI projects, and autonomous driving. Lower regulatory credit sales also pressured profitability.
Core automotive performance was mixed: Tesla delivered 486,532 vehicles in Q3, an increase over the previous quarter but fewer than in the same period last year. Revenue from solar and energy storage declined 16% year-over-year to $2.8 billion, attributed to tariff-related customer refunds. Conversely, the services business, which includes Full Self-Driving (FSD) subscriptions, grew 33% year-over-year to $4.6 billion, setting a record for gross profit.