Elon Musk says Tesla robot production hit by trade war with China

Tesla planned to produce thousands of Optimus robots this year, but are now lacking a key component

Tesla’s Optimus robot is being developed to serve as a general purpose robot (STR/AFP via Getty Images)

Tesla chief executive Elon Musk has said that export restrictions in China have disrupted the production of its humanoid robot Optimus.

Speaking on a company earnings call on Tuesday, Mr Musk said one of the robot’s key components is no longer available for import to the US due to the escalating trade war with China.

Earlier this month, China added seven rare-earth minerals to its export control list as part of retaliatory measures to tariffs introduced by US President Donald Trump.

“We’re working through that with China. Hopefully we’ll get a license to use the rare-earth magnets,” Mr Musk said.

“China wants some assurances that these are not used for military purposes, which obviously they’re not. They’re just going into a humanoid robot.”

The Tesla boss said he would also be cutting back his role in the Trump administration in order to focus on his companies.

Tesla reported a 70 per cent drop in profits compared with the same period last year, which the company attributed to “changing political sentiment” impacting demand.

Mr Musk’s role leading the Department of Government Efficiency (DOGE) has proved controversial, sparking protests at Tesla dealerships and boycotts of Tesla vehicles around the world.

Demonstrators protest against Elon Musk and Department of Government Efficiency cuts outside a Tesla dealership on 12 April, 2025, in Kansas City, Mo (AP Photo/Charlie Riedel)

Tesla had hoped to produce thousands of Optimus robots this year as part of Mr Musk’s plans to automate physical human labour across all industries.

Mr Musk has previously said that Optimus will eventually be worth more than Tesla’s self-driving car business.

“Essentially, in the future, physical work will be a choice. If you want to do it, you can, but you won’t need to do it,” he said during a 2022 earnings call.

“I was surprised people did not realise the magnitude and importance of this programme. Those who are insightful or listen carefully will understand that Optimus will ultimately be worth more than the car business, worth more than FSD (full self-driving).”

In China, humanoid robots have already entered mass production, with six separate robotics firms aiming to manufacture at least a thousand units this year.