Is Musk’s humanoid robot army worth $1 trillion?

With Tesla reporting a 37% quarterly dip in its net income last week, chief executive Elon Musk appeared focused on anything but the automaker’s vehicle sales.

Musk, while defending a proposed compensation plan that could net him $1 trillion and 28% of the company, insisted that he would need more control of Tesla before delivering on his plan to develop a supposedly civilization-altering humanoid robot army.

“My fundamental concern with how much voting control I have at Tesla is, if I build this enormous robot army, can I just be ousted in the future?” he said on a Wednesday call with investors. “I don’t feel comfortable building that robot army if I don’t have at least influence over it.”

Since 2019, Tesla’s Model 3 and Model Y sales have made it a consistently profitable company and the global leader in the electric vehicle market. But with the company’s auto sales lagging this year amid intensifying competition, an aging lineup of vehicles, and backlash over Musk’s right-wing politics, Musk has taken to marketing more fantastical products. His favorite is Optimus, Tesla’s bipedal humanoid robot, which is still in early development.

During the investor call, he claimed no company “can do what we can do with real-world AI.”

“We believe with Optimus and Self-Driving that you can actually create a world where there is no poverty, where everyone has access to the finest medical care,” Musk said. “Optimus will be an incredible surgeon, for example.”

He made the remarks a few weeks after predicting that Optimus, which Tesla began developing in 2021, would someday account for 80% of Tesla’s revenue and that working would become “optional.”

But despite Musk’s lofty claims, the future of Optimus remains highly uncertain.

Supply bottlenecks, battery life, and the “hands problem”

In July, Milan Kovac, the head of the Optimus program, left the company. Musk had credited Kovac for building “the Optimus team from nothing to the most sophisticated humanoid robot in the world.” Shortly before Kovac’s departure, tech publication The Information reported that Tesla was struggling with supply bottlenecks, threatening Musk’s promise to produce 5,000 Optimus robots by the end of the year. A subsequent report revealed that Tesla had given up on Musk’s goal of building thousands of Optimus robots this year, as the company struggles to develop dextrous, human-like hands and forearms.

Musk, who has repeatedly lamented what he calls the “hands problem,” said Wednesday that having “an incredible hand” is the only way Tesla can create “a useful generalized robot.”

Kevin Lynch, the director of Northwestern University’s Center for Robotics, which is developing robotic hands for workplace applications, told the Wall Street Journal last week that his lab is “setting 10 years as our goal to have dexterity, be functional and useful and able to do some of the things that humans do.”

These issues could explain why Musk, who tends to be recklessly optimistic about Tesla’s development timelines, has recently stressed the hurdles inherent to the Optimus program. “Bringing Optimus to market is an incredibly difficult task, to be clear,” he said on the investor call last week. “...Trying to make a million Optimus robots per year, that manufacturing challenge is immense, considering that the supply chain doesn’t exist.”

On X, Musk poured cold water on one Tesla fan for suggesting that robots would replace human labor by next year, writing, “It will take many years before enough robots are built to matter.” That view is a departure from comments Musk shared as recently as May, when he said, “We expect to have thousands of Optimus robots working in Tesla factories by the end of this year, beginning this fall.”

While specialized robotic systems are already widely used in manufacturing and logistics, the class of general-purpose robots Tesla is developing is exponentially more complex and potentially unsuited to the kinds of workloads Musk envisions for Optimus.

Former Optimus team lead Chris Walti, who left Tesla in 2022 to found a robotics startup, told Business Insider that humanoids are “not a useful form factor” for manufacturing and logistics. “[Humans] weren’t designed to do repetitive tasks over and over again,” he said. “So why would you take a hyper suboptimal system that really isn’t designed to do repetitive tasks and have it do repetitive tasks?” Walti also described humanoids, which are designed to be anatomically analogous to humans, as “kind of a ninth-inning robotics problem, and we’re in the third inning.”

Affordability represents another humanoid development challenge. The estimated production costs for Atlas, a humanoid being developed by Boston Dynamics, can range from $100,000 to $500,000 per unit. Musk, meanwhile, has claimed that Tesla will charge consumers less than $20,000 for an Optimus, though he recently raised that figure to $30,000.

Even if Tesla or another company managed to build a humanoid capable of productive labor, current battery constraints would limit its capabilities. “Most humanoids still run only two to four hours on a charge—far short of the eight to 12 hours that define real-world shifts,” consulting firm McKinsey wrote in an October report. “As a result, robots spend too much time idle and cannot deliver productivity comparable to human workers. The primary blocker is the battery. Until [original equipment manufacturers] can provide sustained uptime, humanoid deployments will be restricted to pilots.” The report also noted safety concerns that would arise in a workplace shared by humans and humanoids.

“The biggest product of all time”

Since 2021, when Tesla first unveiled its Tesla Bot, which later became Optimus, the company has held numerous promotional stunts meant to show off the product’s abilities. At its AI Day event in 2021, Tesla trotted out a man dressed in a robot-like bodysuit to dance on stage. It debuted an actual — albeit crude — robot the following year to perform a simple “raise the roof” dance move.

By 2024, Tesla had developed shinier prototypes, versions of which walked beside audience members attending a demonstration. However, those robots were being remotely controlled by humans, rather than the “real world” autonomous AI systems that Musk has said will put Tesla ahead of competing robotics firms.

Over the last year, Tesla has released a number of flashy videos that purport to show Optimus’ growing abilities, including “kung fu” movements. But it is unclear how many of those demonstrations rely on human control. As of July, Tesla was still relying on remote operators for its robots to perform simple demonstrations, including awkwardly serving buckets of popcorn.

The extremely limited capabilities of Optimus at present have not caused Musk to tone down his rhetoric about the future. “We’re also on the cusp of something really tremendous with Optimus, which I think is likely to be, or has potential, to be the biggest product of all time,” he said last week, adding, “I do think we’re headed for a world of sustainable abundance.”

“Robots that can build other robots”

Musk is not the only tech oligarch who believes robots will create a nearly infinite stream of capital. “Robots that can build other robots… aren’t that far off,” OpenAI chief executive Sam Altman wrote in a June blog post. “If we have to make the first million humanoid robots the old-fashioned way, but then they can operate the entire supply chain—digging and refining minerals, driving trucks, running factories, etc.—to build more robots, which can build more chip fabrication facilities, data centers, etc, then the rate of progress will obviously be quite different.”

As for why Musk has chosen now to lean on Optimus, it could be related to Tesla’s challenging year. For the third quarter, Tesla reported a 40% decline in operating income, despite record-high vehicle deliveries spurred by the expiration of a federal electric vehicle tax credit.

With the tax benefit now gone, Musk has already conceded that Tesla will face “a few rough quarters,” as its U.S. demand dries up. Even still, he is pushing for shareholders to approve his $1 trillion compensation plan.

Whatever actual revenue Optimus might generate in the distant future, the robots have already been useful in Musk’s efforts to secure his payout. “I just don’t feel comfortable building a robot army here, and then being ousted because of some asinine recommendations from ISS and Glass Lewis, who have no freaking clue,” he said, referring to proxy advisers Institutional Shareholder Services and Glass Lewis, which last week recommended that Tesla investors reject Musk’s $1 trillion compensation plan.

When Musk appears at Tesla’s annual meeting next month, where shareholders will decide on his pay, he will be joined by a troupe of dancing robots. Perhaps they will be the same models that Tesla used in a recent X video in which a group of Optimus bots implored shareholders to greenlight Musk’s compensation package.