Tesla began building its Optimus humanoid robot at the Fremont factory this quarter, converting space that once turned out electric vehicles, the company disclosed Wednesday. The milestone arrived alongside a 43 percent collapse in third-quarter net income to $787 million, a decline that underscores how much capital the automaker is diverting from its core business into artificial intelligence and robotics.
The numbers behind the drop
Revenue was essentially flat at $28.04 billion, down a hair from $28.09 billion a year earlier and about $200 million below the prior quarter. Automotive sales, still the engine of the company, held at $20 billion year over year. Deliveries reached 486,532 vehicles, up roughly 6,000 sequentially but below the same period in 2025. Energy generation and storage revenue fell 16 percent to $2.8 billion, which Tesla attributed to tariff-related customer refunds. Services revenue rose 33 percent to $4.6 billion, producing $734 million in gross profit for the segment, a quarterly high.
Spending on AI and robots outpaces the top line
Operating expenses surged as Tesla poured money into AI infrastructure, Full Self-Driving development and the Optimus program. The company described the current output as "early production" and warned the ramp will be slow and "somewhat bumpy." Chief Executive Elon Musk said the target is 20,000 units per week by the end of 2027, though he acknowledged the design still needs work to ensure the robots are safe, reliable and durable enough not to wear out after a month.
The autonomy timeline slides again
On the earnings call, executives struck a bullish tone on Full Self-Driving even as the schedule for unsupervised driving moved further out. Vice President of AI Software Ashok Elluswamy said the first customer vehicles might join a robotaxi fleet around the second quarter of next year. In April, Musk had said the unsupervised version would "probably" arrive in the fourth quarter of this year. The supervised version available today still requires the driver to remain alert and ready to intervene.
What to watch next
Investors are now pricing a company that makes cars but spends like an AI lab. The services gross profit record shows the subscription model is working, but it is not yet large enough to offset the drag from flat auto revenue and rising R&D. The next inflection point depends on whether Optimus can move from a production-line curiosity to a product with a purchase order, and whether the robotaxi timeline holds this time.