Tesla has started production of its Optimus humanoid robot at its Fremont, California factory, the manufacturing space once dedicated to making electric vehicles, the company announced Wednesday.

“The bots coming off this line are the first production-quality bots that we have manufactured,” Tesla wrote in its third-quarter letter to shareholders. “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.”

That future-looking development wasn’t enough to lift up company’s otherwise middling third-quarter earnings, results that typify a company at the midpoint of a major bet. Tesla’s revenue was flat and its expenses skyrocketed as it pressed the accelerator on its Optimus robots, AI, and autonomous driving. The end result was a 43% drop in profits.

The company’s revenue was largely driven by the sale of its EVs, which was flat year-over-year at $20 billion. Tesla delivered 486,532 vehicles in the third quarter, about 6,000 more than the previous quarter, but lower than the same period last year.

Tesla’s total third-quarter revenue was $28.04 billion, a skosh below the $28.09 billion it generated in the third quarter of 2025. Tesla’s third-quarter revenue was also lower, by about $200 million, from the previous quarter’s haul of $28.23 billion.

Tesla saw a 16% year-over-year drop in its solar and energy storage business to $2.8 billion, which it blamed on tariff-related customer refunds. There was some positive revenue growth under services, a category that includes customers subscriptions to its Full Self-Driving advanced driver-assistance software. Tesla’s services business grew 33% year-over-year, bringing in $4.6 billion.

None of this was enough to outpace Tesla’s spending on artificial intelligence projects, and its Optimus robot, which was a big hit to profits.

The company reported $787 million in net income, a 43% drop from the same period in 2025 when it earned $1.37 billion. Lower regulatory credit sales also put pressure on its profitability. The company stayed in the black in large part because of a big boost from its “services and other” segment, which accounted for a record $734 million in gross profit for the quarter.

When you purchase through links in our articles, we may earn a small commission . This doesn’t affect our editorial independence.

Sean O’Kane is a reporter who has spent a decade covering the rapidly-evolving business and technology of the transportation industry, including Tesla and the many startups chasing Elon Musk. Most recently, he was a reporter at Bloomberg News where he helped break stories about some of the most notorious EV SPAC flops. He previously worked at The Verge, where he also covered consumer technology, hosted many short- and long-form videos, performed product and editorial photography, and once nearly passed out in a Red Bull Air Race plane.

You can contact or verify outreach from Sean by emailing [email protected] or via encrypted message at okane.01 on Signal.

Buy One Pass, Get a Second Free Cover more ground at TechCrunch’s ultimate founder bootcamp of the year by bringing your co-founder or partner for free Book before the BOGO deal expires

People are using AI to make their smart TVs dumb again Sarah Perez

Everyone’s watching the Elizabeth Holmes documentary ‘You Can See Everything’ Anthony Ha

Anthropic says its workforce has become less junior and is spending more time in meetings Anthony Ha

Replit makes OpenAI its default over Anthropic, CEO says Kirsten Korosec Lucas Ropek Rebecca Bellan

Mark Wahlberg wants to take on the longevity-startup crowd with an affordable gym concept Connie Loizos

India becomes the latest country to report rogue AI agent activity Aditya Mehta

Tesla reveals SpaceX-powered Roadster that flies and falls with style Sean O'Kane