Tesla Inc.'s (NASDAQ:TSLA) plans to ramp up production of its humanoid robot Optimus are facing significant roadblocks due to supply chain constraints and China's new export restrictions on rare earth materials.
What Happened: On Tuesday, during Tesla's first-quarter earnings call, CEO Elon Musk said that Optimus remains in early-stage development, with mass production still months away.
Musk said the company hopes to produce thousands of the robots by the end of the year, but cautioned that progress is "totally impossible" to predict.
The billionaire highlighted one key challenge as China's requirement for export licenses on rare earth magnets--critical components in Optimus actuators.
Tesla's robot arms use permanent magnets to stay compact and efficient, but the new restrictions have disrupted the supply, Musk said.
See Also: Ford Recalls Nearly 150,000 Vehicles Over Brake And Powertrain Issues: NHTSA
“We're working through that with China. Hopefully, we'll get a license to use the rare earth magnets. China wants some assurances that these are not used for military purposes, which, obviously, they're not,” the Tesla CEO said.
In addition to the geopolitical hurdles, Musk underscored the extreme complexity of Optimus. "Almost everything in Optimus is new," he said, noting the robot has about 10,000 unique parts and no existing supply chain for most components.
“When you have a new complex manufactured product, it'll move as fast as the slowest and least lucky component in the entire thing,” he stated.
Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox.
Why It's Important: Tesla reported first-quarter revenue of $19.34 billion, marking a 9% decline from the same period last year. The figure fell short of Wall Street's expectations, missing the consensus estimate of $21.35 billion.
Previously, it was reported that Tesla is encountering new hurdles in its production plans following the Donald Trump administration's 145% tariffs on Chinese imports.
Tesla has also reportedly stopped accepting new orders for its U.S.-made Model S and Model X in China. Last year, China imported more than 1,553 Model X units and 311 Model S vehicles.
Price Action: Tesla shares increased by 4.60% on Tuesday, reaching $237.97. However, the stock has dropped 37.26% year-to-date, according to Benzinga Pro.
The company currently holds a growth score of 67.63%, based on Benzinga Edge Stock Rankings. Click here to see how it compares with other companies in the sector.
Photo Courtesy: Iv-olga On Shutterstock.com
Check out more of Benzinga’s Consumer Tech coverage by following this link.
Read Next:
- Charlie Munger Once Said Warren Buffett Is A ';Learning Machine' And That's What Lies Beneath Berkshire Hathaway's Success From One Decade To Another
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
