Tesla profit drops 43% as Optimus production begins
- Tesla reported $787 million in net income for the third quarter of 2026, marking a 43% drop from the $1.37 billion the company earned during the same period...
- The profit decline arrives as Tesla begins manufacturing its Optimus humanoid robot on lines in Fremont, California, repurposing factory space previously used to build electric vehicles.
- Tesla’s aggressive push into robotics and artificial intelligence weighed heavily on its quarterly ledger.
Tesla reported $787 million in net income for the third quarter of 2026, marking a 43% drop from the $1.37 billion the company earned during the same period in 2025, according to financial results published on Wednesday, October 21, 2026. Revenue held nearly flat at $28.05 billion while operating expenses jumped 39% to $4.78 billion as the company poured capital into artificial intelligence, chip development, and humanoid robotics.
The profit decline arrives as Tesla begins manufacturing its Optimus humanoid robot on lines in Fremont, California, repurposing factory space previously used to build electric vehicles. The third-quarter results capture a company absorbing heavy upfront costs for an aggressive pivot toward autonomous systems and robotics.
Operating Expenses Outpace Sales as Spending Doubles on AI and Robotics
Tesla’s aggressive push into robotics and artificial intelligence weighed heavily on its quarterly ledger. Research and development spending reached $2.76 billion during the quarter, contributing to a total operating expense of $4.78 billion. Vaibhav Taneja stated on the earnings webcast that the cost increases stemmed primarily from AI development, chip development, and preparing the Optimus robot for production.
Optimus will be the biggest product ever made.A general-purpose humanoid robot that can do useful work at scale will change the economics of labor & manufacturing.Goal is to get Optimus to high-volume production as fast as possible.If you’re great at AI, engineering, or… pic.twitter.com/4s92onmu2A
Capital expenditures more than doubled to $4.73 billion, with Taneja pegging total capital spending for 2026 at approximately $20 billion. Tesla also secured the ability to borrow up to $30 billion, though executives noted there are no plans to draw on those funds this year. Operating income fell 56% to $718 million, yielding an operating margin of 2.6%.
Automotive Revenue Cools While Services and Energy Shift
Car sales continued to generate the bulk of Tesla’s revenue, though automotive income slipped 3% to $20.56 billion. Tesla delivered 486,532 vehicles during the quarter and reached a manufacturing milestone by producing its 10 millionth car, ending the period with its largest backlog of vehicle orders in four years. Battery supply constraints remained the primary bottleneck limiting total output.
Energy storage and solar revenue dropped 16% to $2.88 billion, a decline Tesla attributed in part to tariff-related customer refunds. Meanwhile, services and other revenue—which encompasses Supercharging, vehicle insurance, and the robotaxi business—climbed 33% to $4.61 billion. Revenue from regulatory credits, purchased by automakers missing emissions mandates, fell to $113 million from $417 million.
Fremont Assembly Line Begins Early Optimus Production
The company confirmed it has started building production-quality units of its Optimus humanoid robot inside its factory in Fremont, California, utilizing floor space that once assembled the Model S. The bots coming off this line are the first production-quality bots that we have manufactured,
Tesla wrote in its shareholder update.
Elon Musk characterized the output as early production and warned that the manufacturing ramp would be somewhat bumpy. Musk told investors that reaching a production rate of 20,000 robots per week would likely take at least a year, maybe a little longer, citing ongoing engineering work required to refine the robot’s hands and ensure long-term durability. Tesla aims to start delivering Optimus to other companies around the end of next year.
Cybercab Rollout Plans and Unsupervised FSD Timelines
Tesla executives outlined plans for autonomous vehicles, confirming that every Cybercab built so far is routed into the company’s own robotaxi fleet. Lars Moravy stated that Tesla was trying to get Cybercabs to customers by the end of 2026, starting small. Ashok Elluswamy stated that Cybercab rides would launch in Dallas next month, even as federal safety regulators investigate the vehicle over federal safety standards.
Owners of existing Tesla vehicles equipped with Full Self-Driving software will wait longer for unsupervised capabilities. Although active subscriptions for the supervised FSD package rose 67% to 1.74 million vehicles in North America, the transition to unsupervised, Level 4 autonomy has been pushed back. Elluswamy stated that Tesla expects to turn on some of the first customer vehicles to be part of the robotaxi fleet around the second quarter of 2027.
Questions Remain Over Timeline and Manufacturing Hurdles
Key questions persist regarding how quickly Tesla can resolve the manufacturing bottlenecks on the Optimus assembly line and whether regulatory approval will clear the steering-wheel-free Cybercab for public roads. While executives pointed to commercial rollouts, the exact production volumes, retail price tags, and final delivery schedules for outside buyers remain undisclosed.