Tesla Starts Optimus Production as Q3 Profit Plunges 43%
Tesla starts Optimus production in Fremont as third-quarter profit falls 43%, with flat EV sales and rising AI and robotics spending squeezing earnings.
Summary
On October 21, 2026, Tesla announced production of its first commercial-quality Optimus humanoid robots at its Fremont, California factory, using space formerly dedicated to electric vehicles. Tesla said the manufacturing process can support a commercial product, although it will continue refining the hardware and production system.
Third-quarter EV revenue was flat year over year at $20 billion. Tesla delivered 486,532 vehicles, about 6,000 more than the previous quarter but fewer than a year earlier. Total revenue reached $28.04 billion, versus $28.09 billion in third-quarter 2025 and $28.23 billion in the previous quarter. Solar and energy storage revenue fell 16% to $2.8 billion after tariff-related customer refunds, while services revenue, including Full Self-Driving subscriptions, rose 33% to $4.6 billion. Spending on Optimus, artificial intelligence and autonomous driving, alongside lower regulatory credit sales, cut net income 43% to $787 million from $1.37 billion. Tesla remained profitable largely because services and other generated a record $734 million in quarterly gross profit.
Positives
- Tesla has begun producing its first commercial-quality Optimus robots at its Fremont factory in former EV manufacturing space.
- Tesla says the current Optimus manufacturing process is suitable for a commercial product, with further hardware and production refinements planned.
- Services revenue, including Full Self-Driving subscriptions, increased 33% year over year to $4.6 billion.
- Services and other generated a record $734 million in quarterly gross profit, helping Tesla remain profitable.
- Tesla delivered 486,532 vehicles, about 6,000 more than in the previous quarter.
Risks & concerns
- Net income fell 43% to $787 million from $1.37 billion in the same quarter of 2025.
- EV revenue was flat at $20 billion, while vehicle deliveries remained below the year-earlier level.
- Total revenue of $28.04 billion trailed both third-quarter 2025 revenue of $28.09 billion and the previous quarter's $28.23 billion.
- Solar and energy storage revenue dropped 16% to $2.8 billion after tariff-related customer refunds.
- Rising Optimus, AI and autonomous-driving expenses, combined with lower regulatory credit sales, pressured profitability.