Tesla turns to deceptive smoke screen as political and economic realities take a toll
In a surprising turn of events, Tesla's ambitious project to create a humanoid robot, Optimus, is facing significant delays and challenges. Originally targeted for mass production in 2025, the company has only managed to produce a few hundred units as of mid-2025, with many remaining unfinished due to technical bottlenecks [1][3].
The primary issues lie in the design and assembly of the hand and forearm components. These components face mechanical and electrical issues such as overheating, limited battery life, and complexity, necessitating design recalibration and halting mass production efforts [1][3].
Additionally, supply chain challenges and leadership issues have further complicated the production process. Earlier production delays were linked to sourcing rare-earth magnets from China, although some restrictions have recently been eased. The departure of the head of engineering for Optimus and legal disputes over trade secrets related to former employees and robotics startups have contributed to instability and delays [3].
As a result, Tesla paused production around mid-2025 to recalibrate designs and resolve hardware issues. Optimus 3 production is now projected to start in early 2026, making a million-unit annual output a longer-term goal rather than an immediate prospect [3].
Elon Musk, CEO of Tesla, remains moderately to highly confident in the robot's long-term potential but has not given any near-term guarantees on meeting the original aggressive timelines. Industry reports indicate that the 2025 target of 5,000 units is increasingly unattainable, and the production timeline has been pushed back [1][2][3].
Meanwhile, Tesla's automotive operation is also facing challenges. The company reported a 23% decrease in net profits in Q2 2022. Sales of Tesla vehicles in Europe have dropped by one-third this year, according to figures from the European Automobile Manufacturers Association (ACEA). Tesla shares fell almost 7% after the Q2 earnings report, marking a 30% decrease from the peak of $480 per share in December 2021 [6].
The steep trade tariffs introduced by Trump in the US also pose a threat to Tesla's bottom line. The decrease in profits is attributed to the loss of EV and solar power incentives in the US due to the "Big Beautiful Bill" passed by former President Trump [7].
Despite these challenges, Musk continues to push the idea that Tesla's future success will come from a self-driving robotaxi service. Rumors of an affordable Model Q from Tesla have persisted into this year.
In the competitive automotive market, Tesla faces competition in the luxury market from European marques, and in the mass market, particularly from China's BYD. The focus on Optimus comes amidst concerns about Tesla's automotive operation, causing some to question if anyone will miss the brand in the future, referencing the DeLorean as a car that once held the mantle of the car of the future but is now only remembered in a fantasy film [8].
Status Update on Optimus Production:
- Production volume: Only hundreds built vs. 5,000 target for 2025
- Technical bottlenecks: Hand and forearm component issues causing assembly delays
- Supply chain challenges: Rare-earth magnet sourcing issues partially resolved
- Leadership & legal issues: Engineering leadership departure and trade secret disputes
- Revised production timeline: Mass production paused mid-2025, Optimus 3 expected early 2026
- Musk’s outlook: Moderate to high confidence long-term; near-term uncertain
- The technical bottlenecks in the hand and forearm components of Tesla's Optimus project have led to significant delays in mass production, which was initially targeted for 2025.
- Supply chain challenges, such as sourcing rare-earth magnets, and leadership issues, like the departure of the head of engineering for Optimus and legal disputes over trade secrets, have further complicated the production process of Optimus.
- Consequently, Tesla had to pause production around mid-2025 to recalibrate designs and resolve hardware issues, pushing the production timeline for Optimus 3 to early 2026.
- Elon Musk, CEO of Tesla, is moderately to highly confident in the long-term potential of Optimus but has not given any near-term guarantees on meeting the original aggressive timelines.
- While facing challenges in Optimus production, Tesla's automotive operation is also experiencing difficulties, with a 23% decrease in net profits in Q2 2022 and a drop in sales of Tesla vehicles in Europe this year.
