Tesla says Optimus production has begun at Fremont

In the Q2 update, Fremont Optimus was still listed as Construction. Tesla wrote that it had decommissioned the Model S and Model X lines and was installing the first-generation Optimus lines, "where we expect to start production soon." It said the initial builds would be used in its Optimus Academy "for training data collection and further functionality development"[2].

The Q3 capacity table moves California Optimus to Early Ramp. Texas Optimus stays at Construction, and the Optimus rows still show no installed-capacity number[1]. The manufacturing section says production began in Fremont on high-volume lines, and that the bots coming off the line are the first production-quality bots Tesla has manufactured. "While we will continue to iterate on the hardware and manufacturing process, we have proven that the current manufacturing process for Optimus is suitable for a commercial product," the update says[1]. The outlook repeats that production has begun for Optimus in Fremont and for the Tesla Semi in Nevada[1].

The update gives no Optimus unit count, price or named customer. The capacity-table note says installed capacity is not the current production rate[1].

Tesla abbreviates Super Intelligence as SI. The installed-capacity table lists Cortex 1 at more than 105 MW and Cortex 2 at more than 120 MW, both in production in Texas. A footnote says the table excludes 40 MW of other compute that is not part of Cortex 1 or Cortex 2[1]. In the Q2 update those two lines were more than 90 MW and more than 115 MW[2].

"We plan to reach 400 MW of SI training compute by the end of the year, supporting the development of both vehicle and humanoid robot autonomy software," the Q3 update says[1]. Tesla also says construction of the Austin Fab continued, and that it plans to start commissioning equipment there in 2027[1]. A photo caption calls the site a semiconductor manufacturing facility. The update does not name an outside partner for it.

Active FSD subscriptions were 1.74 million, up 67% from 1.04 million a year earlier[1]. Tesla says the metric follows the 2025 CEO Performance Award: it counts upfront payments and monthly subscriptions, and it leaves out free trials[1]. The attach rate on new vehicle deliveries in North America was over 75%, which Tesla calls a nearly twenty percentage point rise from the prior quarter. "We believe that FSD is driving demand in markets where it is available, and we continue to work with regulators to get it approved in other markets," the update says[1]. The footnote on FSD (Supervised) says active driver supervision is required and that the system does not make the vehicle autonomous[1].

Tesla says it has received four further FSD approvals since the end of the second quarter, in Croatia, Slovenia, the Czech Republic and Slovakia. It says FSD is now available in nine EU countries and used by over 100,000 customers, who have logged more than 160 million kilometres since the initial approval[1].

Robotaxi rides using Cybercabs started on 3 September in Austin. Cumulative unsupervised Robotaxi miles were nearly two million at the end of the quarter, and Tesla says that cumulative total grew eightfold from the prior quarter. Operating hours in Austin are 6am to midnight[1].

The unaudited financial summary, in millions of US dollars except the per-share lines[1]:

Tesla defines free cash flow as operating cash flow less capital expenditure[1]. On the statement, $6,263 million minus $4,732 million is the $1,531 million free-cash-flow line. Quarter-end cash, cash equivalents and short-term investments were $45,447 million. Tesla says the sequential increase of $1.9 billion came primarily from free cash flow. The prior quarter's balance-sheet line is $43,524 million[1].

The highlight box rounds GAAP operating income to $0.7 billion, GAAP net income to $0.8 billion and non-GAAP net income to $1.7 billion[1]. On the statement of operations, total GAAP net income is $804 million and the amount attributable to common stockholders is $787 million[1]. Operating margin was 2.6%, against 5.8% a year earlier. GAAP gross margin was 19.6%. Automotive gross margin excluding regulatory credit sales was 18.1%, against 15.4%[1]. Automotive revenue of $20,560 million includes $113 million of regulatory credits, against $417 million a year earlier[1].

Tesla says the drop in operating income came from higher operating expenses, driven by SI and other research projects, stock-based compensation including the 2025 CEO Performance Award, and SG&A, and from lower regulatory-credit revenue and lower energy gross profit. Among the offsets it lists are services gross profit and higher automotive ancillary sales, "primarily driven by an increase in FSD subscriptions"[1]. Research and development was $2,761 million, against $1,630 million. Stock-based compensation in the cash-flow statement was $1,165 million, against $663 million[1].

Energy revenue fell 16% while storage deployments rose 10%, to 13.7 GWh from 12.5 GWh[1]. Tesla says the energy-revenue decline was in part from tariff-related customer refunds[1]. Services and other gross profit rose $86 million from the prior quarter to a record $734 million, a 15.9% gross margin, with Tesla attributing the growth to charging, insurance and parts[1].

Production was 464,391 vehicles, up 4%, and deliveries were 486,532, down 2%[1]. Tesla had already published those production and delivery counts, and the 13.7 GWh storage figure, on 2 October[3]. The update says battery availability was still the limit on raising vehicle volume, and that Tesla produced and delivered its 10 millionth vehicle[1]. The cumulative-deliveries row reads 10.2 million. The footnote says that metric, under the 2025 CEO Performance Award, counts new vehicles delivered to customers plus any unsupervised Robotaxis placed into commercial operation[1].

Adding the four quarterly revenue lines in the statement, from the fourth quarter of 2025 through this quarter, gives $103,570 million. Tesla says the quarter was its second in a row with trailing-twelve-month revenue above $100 billion[1]. Adding the preceding four quarters in the same statement, the third quarter of 2025 through the second quarter of 2026, gives $103,619 million.

CNBC reported capital expenditure of $3.73 billion[4]. Yahoo Finance reported $4.732 billion[5]. The update's capital-expenditure line is $4,732 million, up 110% from $2,248 million a year earlier and below the $5,789 million in the second quarter[1]. The Verge reported $1.7 billion of net income on $28.0 billion of revenue[6]. In the update, $1,697 million is non-GAAP net income attributable to common stockholders, and $787 million is the GAAP figure attributable to common stockholders[1].

The cash-flow statement records a $288 million unrealized gain on digital assets and a $142 million unrealized loss on Tesla's SpaceX equity investment[1]. The non-GAAP reconciliation takes those marks out, net of tax, together with stock-based compensation and a tax item[1].

The outlook does not publish a new full-year capital-expenditure dollar target. It says the build-out of SI compute, solar, battery material and semiconductor manufacturing is underway[1].

The quarterly update does not discuss a merger with SpaceX. CNBC, Yahoo Finance and The Verge report that, on SpaceX's call on Tuesday, Musk said a combination with Tesla would be a good idea and that special committees have been formed to discuss it[4][5][6].

CNBC and Yahoo Finance both report this sentence from Musk: "Do I think it would be a good idea? Yes"[4][5]. Yahoo Finance quotes him saying, "I think both SpaceX and Tesla have formed special committees to discuss this idea," and, "because I'm a conflicted party, I can't actually be in the discussions of the special committees"[5]. CNBC reports that he said the boards of both companies have formed special committees[4]. The Verge reports that he called a merger a "good idea" and said he would not be involved in the process[6].

The Optimus line and the compute target are in the same document as a 56% drop in operating income and $4,732 million of capital spending. Fremont Optimus has moved from Construction in the July update to Early Ramp, with Tesla's statement that the process is suitable for a commercial product and that the hardware will keep changing. The 400 MW figure is the training-compute number Tesla attaches to both vehicle software and humanoid autonomy. The 1.74 million FSD subscriptions are the software line that grew while automotive revenue fell 3%.