Tesla 's ambitious plan to produce thousands of humanoid robots this year has hit a snag as China's rare earth export restrictions—imposed in response to President Trump's tariffs—have disrupted the production of its Optimus robots.
During Tesla's earnings call, CEO Elon Musk confirmed the disruption: "Optimus was affected by the magnet issue from China," adding that the company is "working through that with China" to secure export licenses for rare earth magnets essential to the robots' production.
The supply chain complication comes at a critical time for Tesla's robotics ambitions, which Musk has touted as potentially "the biggest product of all time by far" that could be "10 times bigger than the next biggest product ever made," according to comments made at a recent Tesla all-hands meeting, last month.
Elon Musk gets caught in the trade war
Beijing placed seven rare earth minerals under export controls earlier this month, requiring exporters to apply for licenses from China's Ministry of Commerce, a process that can take anywhere from six weeks to several months. The restriction represents China's retaliation against increasingly punitive tariffs imposed by the Trump administration.
"China wants some assurances that these are not used for military purposes, which obviously they're not. They're just going into a humanoid robot," Musk explained during the earnings call. The CEO, who also serves as an adviser to the White House, expressed hope that Tesla would receive the necessary permissions soon.
Tesla’s ambitious production plans for Optimus threatened
The disruption threatens Tesla's goal of producing what Musk colorfully described as "a whole legion of robots"—at least 5,000 Optimus units this year, with plans to scale up to 50,000 in 2026.
Despite these challenges, Musk remains bullish on Tesla's position in the global robotics race. "With respect to humanoid robots, I don't think there's any company in any country that can match Tesla," he stated on the earnings call, adding that while he's "a little concerned that on the leaderboard, ranks two through 10 will be Chinese companies," he remains "confident rank one will be Tesla."
The setback comes during a challenging quarter for Tesla, which reported automotive sales tumbling 20% year-on-year to $14 billion and a nearly 40% drop in net income to $409 million—well below Wall Street expectations.
During Tesla's earnings call, CEO Elon Musk confirmed the disruption: "Optimus was affected by the magnet issue from China," adding that the company is "working through that with China" to secure export licenses for rare earth magnets essential to the robots' production.
The supply chain complication comes at a critical time for Tesla's robotics ambitions, which Musk has touted as potentially "the biggest product of all time by far" that could be "10 times bigger than the next biggest product ever made," according to comments made at a recent Tesla all-hands meeting, last month.
Elon Musk gets caught in the trade war
Beijing placed seven rare earth minerals under export controls earlier this month, requiring exporters to apply for licenses from China's Ministry of Commerce, a process that can take anywhere from six weeks to several months. The restriction represents China's retaliation against increasingly punitive tariffs imposed by the Trump administration.
"China wants some assurances that these are not used for military purposes, which obviously they're not. They're just going into a humanoid robot," Musk explained during the earnings call. The CEO, who also serves as an adviser to the White House, expressed hope that Tesla would receive the necessary permissions soon.
Tesla’s ambitious production plans for Optimus threatened
The disruption threatens Tesla's goal of producing what Musk colorfully described as "a whole legion of robots"—at least 5,000 Optimus units this year, with plans to scale up to 50,000 in 2026.
Despite these challenges, Musk remains bullish on Tesla's position in the global robotics race. "With respect to humanoid robots, I don't think there's any company in any country that can match Tesla," he stated on the earnings call, adding that while he's "a little concerned that on the leaderboard, ranks two through 10 will be Chinese companies," he remains "confident rank one will be Tesla."
The setback comes during a challenging quarter for Tesla, which reported automotive sales tumbling 20% year-on-year to $14 billion and a nearly 40% drop in net income to $409 million—well below Wall Street expectations.
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