Goldman Sachs analyst Mark Delaney said on Monday that Tesla “is happy with the progress” with the hardware development of its Optimus humanoid robot following a management meeting, as the company prepares to unveil the third generation later this year.
“Tesla noted that it is happy with the progress on hardware with Optimus, and highlighted the importance of the capability, reliability, and manufacturability of its design for scaling,” Delaney wrote in an investor note.
The meeting provided the most granular account Goldman has shared of Tesla‘s robotics engineering strategy.
Tesla told Delaney that the hand and forearm have been a primary focus — components the company has previously described as among the biggest engineering challenges in the project.
The robot will use a combination of rotary and linear actuators, the company confirmed.
Tesla said it is manufacturing many of the key components in-house for intellectual property protection, product capability, and scalability.
More commoditised inputs such as cameras will be sourced off the shelf. The approach mirrors Tesla‘s broader vertical integration strategy, which the company has applied across its EV and energy businesses.
On the software side, Tesla told Goldman that AI and model training are central to the Optimus programme.
The company cited the robot’s ability to observe human motion and translate it into corresponding kinetic actions — a technique known as imitation learning that has become standard in the humanoid robotics field.
From Factory Floor to Customer
Tesla CEO Elon Musk said on the company’s Q4 earnings call on January 28 that he expects the company to begin selling humanoid robots to public customers by the end of 2027.
Mass production is scheduled for that year, with limited production expected to begin in late 2026.
The company confirmed in February via its Chinese social media account that its third-generation robot would debut soon.
Musk announced during the same earnings call that Tesla would end production of the Model S sedan and Model X SUV to free factory space for Optimus manufacturing.
Tesla‘s VP of AI software, Ashok Elluswamy, told the Autopilot and Optimus teams in an internal meeting that 2026 would be the most demanding year of their careers, according to a Business Insider report.
Several Optimus units are already performing simple tasks inside Tesla factories.
Musk said he expects them to handle more complex operations by late this year, with the timeline becoming clearer as third-generation hardware progresses.
He said on a podcast earlier this year that it remained unclear whether the company would sell or lease the robot, adding that initial scarcity would give way to abundance within roughly five years.
The xAI Connection
Musk wrote on X that a project called ‘Macrohard’ or ‘Digital Optimus’ is a joint xAI-Tesla initiative, part of Tesla’s previously announced $2 billion investment agreement with the AI startup he founded. Few details have been disclosed about the project’s scope, but the name suggests a software or simulation layer that would complement the physical robot.
Tesla also said it would launch what it has called Terafab, an in-house semiconductor fabrication project designed to produce custom AI and memory chips at scale.
The facility is intended to reduce the company’s reliance on external chipmakers for training and inference workloads tied to its DOJO supercomputers, Optimus robots, and Full Self-Driving software.
Goldman’s Wider View
Delaney’s note sits within a broader Goldman thesis on what the firm calls ‘Physical AI’ — the application of artificial intelligence to machines that interact with the physical world.
In an October research report, the analyst estimated the humanoid robot market could reach $38 billion by 2035 and projected that Tesla‘s Optimus programme could add between $0.10 and $13.00 per share to earnings between 2030 and 2035, depending on production volumes and margin assumptions.
The analyst lowered his price target to $405 from $420 after Tesla’s Q4 earnings in January, citing expectations for negative free cash flow in 2026 as capital expenditure is planned to more than double to over $20 billion.
Delaney has maintained a Neutral rating on the stock since at least late 2024, even as he has raised the target multiple times — from $250 in December 2024, to $345, to $395, to $420, and then back down to $405 after the CapEx guidance.
Despite the cautious rating, Delaney has repeatedly flagged Optimus and autonomy as potential catalysts for outsized upside.
