Tesla Inc (NASDAQ:TSLA)’s Optimus humanoid robot project could be delayed by restrictions on the export of rare earth minerals from China, CEO Elon Musk told investors during the company’s first quarter earnings call on Tuesday.
Describing the situation as a “magnet issue," Musk said that the production of Optimus relies on specialized rare earth magnets for the electric motors in the robot’s arms, components that now face new export licensing challenges.
“We’re working through that with China. Hopefully, we’ll get a license to use the rare-earth magnets,” 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.”
He highlighted that the robots are intended for civilian use, such as household chores, not any military application.
Musk said Tesla is investing billions into the Optimus project and still aims to produce thousands of robots this year, but acknowledged that there are no guarantees on the timeline due to the supply chain uncertainty.
Analysts at Wedbush noted that, to date, China’s imposition of license requirements on the export of certain materials has largely had a fleeting impact, as the country typically grants licenses within a few months of restrictions being announced.
“Tesla's commentary suggests the US carmaker expects the same result with the recent rare earth license requirements,” they wrote.
“However, Tesla's mention of the hurdle last night is a reminder that China has the ability to significantly impede (if not temporarily cripple) a number of industries by halting certain materials exports with products already requiring licenses including both rare earths and III-V materials.”
Shares of Tesla gained 8.3% at $258 following the release of its Q1 report and comments from Musk that he plans to step back from his role in the Trump administration to focus on the company.