Bay Area Factory To Build Millions Of Musk's AI Humanoid Robots

FREMONT, CA — Tesla will stop building its Model X and S vehicles at its factory in Fremont and instead shift focus to making a million AI humanoid robots each year, the company announced Wednesday.

The announcement comes as the company endures a steep drop in income and shifts gears to focus on AI projects such as robots and robotaxis.

The robot will be Elon Musk's and Tesla's third generation of Optimus robots since they first launched in 2021. They're meant to be used for labor, especially dangerous, mundane or repetitive tasks.

“Optimus 3 will be a general purpose robot that can learn by observing human behavior,” Musk said, according to KRON4. “You can demonstrate a task, verbally describe a task … even show it a video and it will be able to do that task. It’s going to be a very capable robot. I think, long-term, Optimus will have a very significant impact on the U.S. GDP.”

The EV company run by Elon Musk reported Wednesday that net income last year dropped 46% to $3.8 billion. It was the second year in a row of steep declines. The drop came despite the introduction of cheaper models and Musk's promise to remain laser-focused on the company after a foray into U.S politics.

Still, Tesla investors have kept the faith in Musk. The stock is up 9% in the past year.

Musk has been urging investors to focus less on car sales and more on what he considers a bright new artificial intelligence future of robotaxis ferrying millions in cars without drivers, or even steering wheels, and robots watering plants and taking care of elderly parents.

Tesla, meanwhile, will continue mass-producing its Model 3 and Y at the Fremont factory, according to city officials, continuing its role as the highest output vehicle factor in North America.

Mayor Raj Salwan praised Tesla's decision to select the Fremont factory for the mass production of these robots.

"Fremont was selected as Tesla’s Optimus hub due to the city’s proven ability to support large-scale, complex manufacturing operations, its highly skilled workforce, and a business-friendly and responsive city administration," Salwan said. "The City of Fremont looks forward to supporting Tesla’s continued growth of both its physical footprint and employment base in Fremont for years to come."

The Associated Press contributed to this report.