What Tesla’s future looks like with Optimus humanoid robots

Elon’s New Workforce Doesn’t Need Lunch Breaks

We have been closely following Elon Musk’s vision for Tesla Optimus humanoid robotics, a project he has described as potentially the largest product opportunity of all time and, in his view, an effectively unlimited revenue generator. While this outlook is clearly ambitious, our focus is on separating aspiration from execution by examining the realistic development pathway, the scalability of the technology, and the practical challenges involved.

Bringing humanoid robots to mass adoption is not just an engineering challenge. It requires the creation of an entirely new global supply chain, new manufacturing processes, and cost structures that can support what could become one of the largest growth markets in the world.

At its core, Musk’s objective is to build humanoid robots capable of replacing work that is unsafe, boring, or repetitive. The ambition is not simply automation, but the creation of machines that can balance, navigate complex environments, and interact naturally with the physical world we live in.

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The US Builds a Foundation for the Humanoid Age

The US is still in the early stages of adopting robotics and humanoid systems, but the direction of travel is clear. The country is actively developing and onshoring new supply chains, with a strong emphasis on strengthening domestic manufacturing and logistics capability. Today, the US already ranks among the top three global leaders in warehouse robotics and autonomous mobile robotics, providing a solid foundation for the next phase of automation.

What we are seeing now is a strategic shift from basic automation toward more advanced, flexible robotic systems that can operate across dynamic environments. This focus on logistics efficiency and manufacturing resilience positions the US well as humanoid and AI-driven robotics mature.

The road ahead for Optimus

Tesla’s Optimus humanoid robotics program is now moving from concept into early execution. The company is transitioning from pilot production in 2025 toward volume production beginning in 2026. During recent Tesla earnings calls, Elon Musk confirmed that Optimus units are already in pilot-stage production and actively deployed across Tesla’s factories, with current output estimated at between 5,000 and 10,000 units.

Looking ahead, Musk has outlined plans to accelerate production in 2026 alongside the launch of Optimus Gen 3, which is expected in Q1 2026. Over the longer term, Tesla has discussed building a dedicated production line with the theoretical capacity to produce up to one million units per year, with higher-volume manufacturing targeted for the latter part of 2026.

By 2027, Musk has referenced aspirational production levels of up to 10 million units annually. While this highlights the scale of Tesla’s long-term ambition, it is important to view these targets with caution. Achieving this level of output would require Tesla to effectively build a global humanoid robotics supply chain from the ground up, while also managing regulatory approvals, engineering complexity, and manufacturing capacity constraints. More conservative and, in our view, more realistic estimates point to achievable production levels in the range of 2 to 5 million units per year as the technology matures and supply chains stabilise.

The gigafactories can do this in theory

We believe one of the largest challenges facing Elon Musk is the need to build an entirely new humanoid robotics supply chain from scratch. Musk acknowledged this directly in a recent appearance on the All In Podcast, noting that scaling Optimus will require a level of supply chain coordination that does not yet exist for humanoid systems.

That said, we also believe this challenge is achievable. Musk has demonstrated his ability to create complex, vertically integrated supply chains before, most notably with Tesla’s electric vehicle platform and SpaceX’s rocket manufacturing operations. In both cases, Tesla and SpaceX were required to develop new production capabilities, supplier ecosystems, and manufacturing processes at scale.

Importantly, Tesla’s existing gigafactory footprint materially lowers the execution risk. These facilities are already designed for high-volume, automated manufacturing, and we see a clear pathway for Tesla to adapt and scale production lines for humanoid robots over time.

How does this impact investors in Tesla

Tesla has long been a volatile stock, and in many ways that volatility reflects how closely the share price is tied to sentiment around Elon Musk himself. We invested in Tesla in early 2020 and later exited the position, largely because the growth story became increasingly difficult to anchor to clear, near-term fundamentals. The market’s view of Tesla often shifts quickly depending on confidence in Musk’s long-term vision.

When we step back and assess the current growth narrative, Tesla is increasingly a mature electric vehicle business operating in a far more competitive environment. EV growth is slowing, pricing pressure is rising, and competition from Chinese manufacturers is beginning to weigh on volumes and margins. At the same time, the market continues to balance these headwinds with optimism around autonomous driving and the long-term potential of humanoid robotics.

Humanoid robotics, in particular, represents a significant upside opportunity, but it also introduces meaningful risk. Any time a company diverts capital and management attention away from its core value drivers, execution risk increases. The path to commercialising humanoid robots remains uncertain, with technological, regulatory, and manufacturing hurdles still ahead.

For these reasons, we believe Tesla is likely to remain a highly volatile stock over the next five years.