Tesla has begun producing its Optimus humanoid robot at its factory in Fremont, California, in manufacturing space once dedicated to electric cars — a manufacturing milestone that arrived alongside third-quarter results showing the cost of the company's bet on robots and artificial intelligence.
"The bots coming off this line are the first production-quality bots that we have manufactured," Tesla wrote in its third-quarter letter to shareholders, published on Wednesday. "While we will continue to iterate on the hardware and manufacturing process, we have proven that the current manufacturing process for Optimus is suitable for a commercial product." The Fremont line occupies floor space freed earlier this year when Tesla stopped building the Model S and Model X there; it is designed to eventually turn out a million robots a year, and a second line under construction in Austin is planned to reach ten million a year.
CEO Elon Musk described the launch on the earnings call as "early production," warning that the ramp will be slow and "somewhat bumpy because it is such a radically new product." He said design work remains to make the robot durable enough for long-term use, and that substantial AI work is still needed before Optimus can handle open-ended tasks — but claimed Tesla will be able to build 20,000 robots a week by the end of 2027, with deliveries to outside customers expected around the end of that year.
The bill for the future
The quarter underlined the trade-off. Revenue was flat at $28.04 billion, with vehicle revenue steady at about $20 billion on 486,532 deliveries — slightly more than the previous quarter but fewer than a year ago. Spending surged: research and development rose 69 percent to $2.76 billion and capital expenditure more than doubled to $4.73 billion, while sales of regulatory credits fell. Net income dropped 43 percent to $787 million, from $1.37 billion a year earlier, and operating profit fell 56 percent. Energy revenue dropped 16 percent to $2.8 billion, which Tesla attributed to tariff-related refunds, while services — including Full Self-Driving subscriptions — grew 33 percent to $4.6 billion, with a record $734 million gross profit.
Why it matters, and what happens next
Tesla is racing a field currently led by Chinese manufacturers, which took the large majority of the more than 22,000 humanoids shipped worldwide in the first half of 2026 — most of them for performance, education and research rather than factory work. Reuters has reported that the materials for an Optimus at low production volumes could cost $50,000-$60,000 per unit, against Musk's long-term target price of around $20,000. Starting production proves Tesla can build the robot; the unanswered question is whether it can build it cheaply enough, and usefully enough, for anyone to buy at scale. The next milestones to watch are the Fremont ramp, the Austin line and the first customer deliveries promised for late 2027.
*Reporting based on TechCrunch and Tesla's third-quarter shareholder letter and results.*