Tesla, once the undisputed leader in electric vehicles with its sleek and fast models that shattered range anxiety myths in the mid-2010s, is now navigating a fiercely competitive landscape. The company, alongside its prominent CEO Elon Musk, faces intensified rivalry and significant political headwinds in 2025. This challenging environment is underscored by a record 9% drop in EV sales during the current year, a consequence of escalating competition from China and the expiration of crucial US electric vehicle tax credits.
In response to these market shifts and his long-held vision, Elon Musk is steering Tesla towards an audacious new frontier: humanoid robots. He firmly believes that the company’s future hinges not on automobiles, but on the widespread deployment of advanced robotics. This strategic pivot marks a significant departure from Tesla’s automotive roots, signaling a profound reorientation of its core business model.
Shifting production from cars to Optimus
During Tesla’s earnings call on Wednesday, February 28, Musk articulated a direct exchange of vehicle production for robot manufacturing. He announced plans to discontinue the Model S and Model X, repurposing their production lines to instead accelerate the output of Optimus humanoid robots. This bold move underscores the company’s commitment to its new robotic ambitions.
“We are going to take the Model S and X production space in our Fremont factory and convert it into an Optimus factory,” Musk stated, outlining an ambitious long-term goal. The aim is to achieve an annual production capacity of one million Optimus units within the current Model S and X footprint at the Fremont facility. This transformation highlights a decisive step towards realizing his vision.
Musk’s ambitious robotic dream
The Optimus humanoid robot embodies a quintessential science fiction dream for the future, according to Musk. He envisions Optimus performing a vast array of tasks, ranging from mundane household chores like cleaning to highly complex procedures such as surgical operations. This expansive scope positions the robot as a multi-functional marvel designed to integrate seamlessly into daily life.
Musk has described Optimus as a pivotal tool for global transformation. He believes it can eradicate world poverty, render human labor optional, and even facilitate humanity’s journey to Mars. He remains confident that these robots will be commercially available to the public by the close of 2027, an accelerated timeline for such advanced technology. In a previous statement in November, Musk evoked popular culture, remarking, “Every human on Earth will have their own personal R2-D2, C3PO. But in fact, Optimus will be better than that,” referencing the beloved Star Wars droids.
Expert skepticism and market realities
While Musk presents an ambitious vision, critics argue that these robot initiatives are mere distractions from Tesla’s struggling core automotive business. The humanoid robot market is already populated with established players like Boston Dynamics and Figure, which are deeply invested in this complex sector. Furthermore, Musk’s own financial future is intricately linked to Optimus; a nearly $1 trillion compensation package, approved by shareholders late last year, requires Tesla to deliver one million Optimus robots within ten years.
An anonymous former senior Tesla engineer, speaking to CNN, acknowledged Musk’s capacity for grand ideas, stating, “Elon is a big thinker and wants to push people’s imaginations to the limit.” However, the engineer highlighted the fundamental differences between the EV and robotics markets. “With EVs, Tesla was really the only one working on that hard problem. Now there are many companies and a lot of competition,” they elaborated, pointing to a more crowded and challenging competitive landscape for robotics.
Optimus development and future challenges
Tesla first unveiled its humanoid robot project at a 2021 event, where an actor in a silver robot suit danced on stage. Musk candidly admitted at the time, “Obviously, this is not real.” Just months later, in January 2022, Musk suggested that Optimus could eventually become “more significant than the vehicles business” for Tesla.
Today, Tesla claims Optimus has made progress, demonstrating capabilities such as sorting objects, serving popcorn, taking out trash, and even dancing. Musk noted on Wednesday that the robot performs “some basic tasks in the factory.” While this represents advancement, it remains a considerable distance from his expansive futuristic vision, even as he projects Optimus could eventually generate $10 trillion in revenue.
Musk has set an ambitious timeline for Optimus’s market entry. At the World Economic Forum in January, he reiterated that the robot would be available for sale by the end of 2027. This aggressive goal, according to experts, might prove more challenging to meet than Musk’s ventures into electric vehicles or SpaceX. Humanoid robots are among the most intricate machines imaginable, and the competitive race to develop them is rapidly intensifying.
The field is far from exclusive to Tesla. Hyundai and Google DeepMind are preparing to implement their Atlas humanoid robot internally in the coming months before a wider customer launch. Similarly, the Consumer Electronics Show (CES) in January showcased numerous companies, including Nvidia, Qualcomm, and Intel, demonstrating humanoid robots powered by their advanced chips and technologies. Ani Kelkar, a partner at McKinsey & Company leading the firm’s advanced automation and autonomy sector, notes that over 90 companies currently offer a humanoid robot product, with more emerging, particularly in the United States and China.
Market potential and deployment timelines
Industry experts from McKinsey, Goldman Sachs, and Morgan Stanley project a substantial future for the humanoid robot market, with valuations potentially ranging from $370 billion by 2040 to an impressive $5 trillion by 2050. Despite the fierce competition, Tesla possesses key advantages. Ken Goldberg, a professor overseeing robotics and automation research at the University of California, Berkeley, pointed to the company’s established expertise in motors, batteries, and mechanisms.
“They also understand how to manufacture something advanced in high volume – cost-effectively, and that’s really important,” Goldberg affirmed, highlighting Tesla’s production capabilities. The company could also benefit significantly from deploying Optimus internally while simultaneously selling it externally, which Goldman Sachs suggested in an October report could provide a “cost advantage” yielding “several thousand dollars per robot.” However, most experts concur that widespread deployment of humanoid robots will likely take at least another decade.
“A big leap could happen, but we don’t know when,” Goldberg observed. He added, “Most technologies develop slowly over time, so I think the expectations around having fully generalized humanoids seem exaggerated.” Bill Ray, a Gartner analyst tracking emerging technologies and robotics, has previously conveyed to CNN his skepticism regarding the practical utility of humanoid robots due to their numerous inherent limitations.
Musk’s track record and current hurdles
Elon Musk has a history of setting aggressive deadlines that he has not met. Notably, he previously predicted Tesla cars would achieve full autonomy by 2018 and that SpaceX would begin launching rockets to Mars by the same year, neither of which has yet occurred. The Optimus project is already facing similar scheduling challenges, as internal targets have been scaled back. The Information reported that Musk initially set an internal goal for Tesla to produce at least 5,000 Optimus units in 2025; this target was subsequently reduced to 2,000 a few months later and has seen further reductions since October. Tesla has not responded to CNN’s request for comment on these revised goals.
Musk himself has acknowledged the inherent difficulties in achieving his ambitious goals. “We are having difficulty with the final hardware design right now,” he stated at the All In Summit in September, specifically pointing to the complexities of the robot’s arm and hand. Replicating human-like dexterity in robotic hands is notoriously challenging, as robots struggle with the nuanced grip required for various objects, such as a wet glass compared to a piece of metal. “People think of space travel as extraordinarily difficult and it is, no doubt, but it turns out that getting a robot to reliably tie a sneaker is harder than getting a rocket out of the atmosphere,” Goldberg explained, illustrating the profound technical challenges.
Musk’s political commentary and open support for figures like former President Donald Trump have also rendered him a contentious public figure, leading to protests and acts of vandalism at Tesla dealerships nationwide. Ross Gerber, an early Tesla investor and CEO of Gerber Kawasaki who is now a vocal critic of Musk, questioned the broader implications: “If they don’t buy his cars, why would they buy a giant robot for their homes?”
During the Wednesday earnings call, Musk addressed “the many who doubt our ambitions to create incredible abundance.” Despite this, he affirmed, “But we are confident that it can be done and that we are taking the right technological steps to ensure that it happens. And Tesla has obviously never been a company that has shied away from solving some of the most difficult problems.” However, experts caution that Musk’s vision of the future will not materialize instantly, and perhaps not for a considerable time. “Elon is a visionary but promises things that sometimes can take longer than his engineers can deliver,” Goldberg concluded. “The research community around the world is working very hard on this, but it’s not going to be solved overnight.”