&imwidth=800&imheight=600&format=webp&quality=medium "Tesla optimus could be musk's biggest product yet, but he admits it faces a huge problem")
Tesla CEO Elon Musk is putting humanoid robots at the centre of the company's future, as the electric vehicle maker ramps up Optimus production plans and spends heavily on artificial intelligence. During Tesla's second-quarter 2026 earnings call, Musk described the robot as potentially the biggest product in history, while warning that manufacturing it will be harder than building cars.
The shift comes even as Tesla reported $28.2 billion in quarterly revenue, up 26% year on year. Yet adjusted earnings before interest, taxes, depreciation and amortisation fell 4% to $3.3 billion. Tesla shares subsequently dropped more than 14% by late Thursday afternoon.
Elon Musk says Optimus is Tesla's biggest bet yet
Musk said Tesla would soon begin series production of Optimus Version 3, with the Fremont, California, factory being refitted to accommodate robot manufacturing. The facility's Model S and Model X production lines were expected to make way for Optimus this summer. Musk described the factory as "quite stunning".
But he also acknowledged the scale of the challenge.
"This is going to be the hardest product to scale-manufacture that we've ever made at Tesla," Musk said. Unlike electric cars, which can rely on established suppliers for many conventional components, Optimus has no existing supply chain for much of its hardware.
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Musk said the robot must eventually learn tasks simply by receiving instructions or watching a video, without requiring specific programming. He called this one of the hardest problems to solve. Tesla's chief financial officer, Vaibhav Taneja, also warned of massive capital expenditure in 2026, much of it linked to Optimus and AI investment.
Robotaxi expands as Tesla pushes beyond electric cars
Tesla is also expanding its Robotaxi service, which currently uses modified Model Y vehicles equipped with its Full Self-Driving technology. The service operates in selected locations in Texas, Florida and the San Francisco Bay Area. "We'll continue to scale, I think, very rapidly," Musk said, pointing to growth of more than 10% a week in miles driven. He also claimed that demand for Full Self-Driving is strong in markets where it is legally permitted, with some customers prioritising the software over the vehicle itself.
Tesla reported 480,126 Model Y and Model 3 deliveries combined in the quarter, without providing a separate breakdown for each model.
Tesla's robot ambition faces a major manufacturing test
Musk's long-term ambition is to move Optimus from internal factory use to industrial customers, with production expected to ramp up in 2027. However, earlier production promises and reveal timelines have slipped. The company has yet to establish a large-scale commercial supply chain for the robot.
The Roadster, another long-promised Tesla vehicle, also received no new update during the call. For investors, the central question is whether Tesla can turn its AI and robotics spending into sustainable revenue. The latest earnings call made clear that Musk sees Optimus as central to that future, but the manufacturing challenge remains unresolved.
