Tesla has begun production of its Optimus humanoid robot in Fremont, California, the company said on October 21, 2026, as its third-quarter results showed the cost of its push into robotics and artificial intelligence. Net income fell 43% to $787 million, while revenue edged lower and spending on AI, Optimus and autonomous driving increased.
Key takeaways
- Tesla says its Optimus manufacturing process is suitable for a commercial product.
- Quarterly electric vehicle revenue held steady at $20 billion.
- Services revenue rose 33%, while energy revenue declined 16%.
- Higher development spending and lower regulatory credit sales pressured profits.
Tesla starts Optimus production in Fremont
Tesla’s Optimus production line is operating in manufacturing space previously dedicated to electric vehicles at its Fremont factory. In its third-quarter shareholder letter, Tesla described the robots coming off the line as its first production-quality units.
“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,” Tesla wrote.
The manufacturing milestone comes alongside increased spending on the robot’s development. Before the results, Cantor analysts had identified production updates for Optimus Gen 3 among the issues investors were focused on.
Vehicle sales hold steady as services grow
Tesla reported $28.04 billion in third-quarter revenue, slightly below both the $28.09 billion recorded a year earlier and the previous quarter’s $28.23 billion. Electric vehicles remained the main revenue source, generating $20 billion, unchanged year over year.
The company delivered 486,532 vehicles, exceeding expectations of 461,974. Deliveries were about 6,000 higher than in the preceding quarter but down 2% from a year earlier.
Solar and energy storage revenue fell 16% to $2.8 billion. Tesla attributed the decline to tariff-related refunds to customers.
Services moved in the opposite direction. Revenue from that business, which includes subscriptions to Tesla’s Full Self-Driving advanced driver-assistance software, increased 33% to $4.6 billion year over year.
AI and robotics spending weigh on profit
Tesla’s quarterly net income declined to $787 million from $1.37 billion in the same period of 2025. Higher expenses tied to artificial intelligence projects, Optimus development and autonomous driving investments weighed on earnings despite broadly stable revenue.
Lower regulatory credit sales added to the pressure on profitability. Growth in services provided a counterweight: the “services and other” segment generated a record $734 million in gross profit for the quarter.
Article produced with the assistance of artificial intelligence and reviewed by the editorial team.