Tesla has begun producing its humanoid robot, Optimus, at its Fremont factory in California, the company confirmed on October 21, 2026. The milestone marks a significant step in Tesla's robotics ambitions, but it arrives alongside sobering financials: quarterly profit fell 43%.

The dual announcement raises a difficult question for the automaker — whether it can convert initial robot production into a profitable business in a market already dominated by Chinese manufacturers.

What Tesla actually started in Fremont

Optimus is being assembled in factory space previously used to build electric vehicles. In its third-quarter update, Tesla described the units coming off the line as its first production-grade machines. The company considers the manufacturing process ready for commercialization, even though the hardware itself remains under development.

CEO Elon Musk characterized the effort as 'early production' and cautioned that the ramp-up could be "somewhat bumpy." He estimated output could reach 20,000 robots per week by the end of 2027.

Reaching that target will not be straightforward. Tesla still needs to refine Optimus's design, safety systems, and AI capabilities. The company has also yet to disclose pricing or delivery timelines for the robot — the two disclosures that would turn a manufacturing ramp into a commercial product, and the clearest markers to watch as the program unfolds.

The 43% that frames the story

Tesla's third-quarter results underscore the cost of its expansion plans.

Net income attributable to shareholders fell to $787 million, down from $1.373 billion in the same quarter a year earlier. Revenue was essentially flat, with Tesla generating $28.046 billion for the period, versus $28.095 billion in the corresponding quarter of 2025.

Expenses tell a different story. Operating expenses rose 39% to $4.776 billion, while operating income dropped 56% to $718 million. Tesla attributed the shift to spending on AI research, increased stock-based compensation, and lower income from regulatory credits.

The automotive business remains the company's core for now: Tesla sold 486,532 cars during the quarter. That is the lens for the Optimus milestone: the robot line is starting up just as Tesla says spending on AI research weighs on profit, and the new business will eventually have to earn its keep.

The race Tesla is trying to catch

Tesla is entering a market where competitors are already shipping robots in volume. According to Counterpoint Research, global shipments exceeded 22,000 units in the first half of 2026, up nearly 300% year over year. Five Chinese manufacturers accounted for 86% of those shipments.

Most of these robots are not yet working in factories. More than 60% went to entertainment, performances, research, and data production.

Grand View Research projects the humanoid robot market will grow from $4.2 billion in 2026 to $40.5 billion by 2033, an annual growth rate of 38.2%. As Cryptopolitan reported, former Nvidia executive Amulya Vishwanath has described robotics as a "Lego era," with essential components and safety standards still being developed.

Where suppliers and chipmakers fit

Tesla's expansion could also benefit suppliers worldwide. McKinsey estimates that actuators — the motorized joints that drive a robot's movement — account for 40%–60% of humanoid hardware costs.

Cost remains another hurdle. Reuters reported that the materials needed to build an Optimus Gen 2 could cost $50,000–$60,000 at low production volumes. Musk, meanwhile, is targeting a long-term price of around $20,000. The gap between those figures — at least $30,000 per unit in materials alone — is a concrete measure of how far costs still have to fall.

Chinese manufacturers hold an advantage in component costs, though their robots still struggle with everyday tasks.

Starting production is an important step for Tesla. Whether Optimus becomes a successful business will depend on how reliably the robot performs, whether customers are willing to pay for it, and how far Tesla can drive down production costs.