Tesla Optimus Robot Hit By China's Rare Earths Crackdown — Elon Musk Says Thousands May Be Ready By Year-End, But No Guarantees

Tesla Inc.'s 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.

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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.

“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.

See Also: How do billionaires pay less in income tax than you? Tax deferring is their number one strategy.

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.

Photo Courtesy: Iv-olga On Shutterstock.com

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