Tesla humanoid robot project hampered by China’s rare earth export curbs

Tesla CEO Elon Musk says the company’s ambitious humanoid robot project has been dealt a major blow following China’s recent export curbs on rare earth minerals.

In an earnings call this week, Musk confirmed that production of its Optimus robots is being impacted by the “magnet issue” — referring to the key robotics component that now requires Beijing approval to be shipped into the US.

Earlier this month, China announced export restrictions on seven rare earth minerals in response to the punitive tariffs imposed by US President Donald Trump. The export curbs also extend to rare earth magnets and other finished products, which have vital uses across various high-tech industries, and in some cases, are indispensable to military applications.

“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,” said Musk in his Tuesday call.

In light of these measures, companies like Tesla are now required to apply to the Ministry of Commerce to obtain their export licences — a process that can range from six or seven weeks to even several months. Such a process, says Musk, would undoubtedly hamper the Optimus rollout plans.

Still, the Tesla boss — who pledged to take a step back from politics and refocus on his business ventures — told investors he remains optimistic of realizing the initial goal of churning out thousands of Optimus robots by year-end, then scaling up its production to 1 million units by 2030.

Musk also acknowledged that the robots’ production timeline is heavily dependent on the availability of critical components, stating that “Optimus production will move as fast as the slowest and least lucky component”.

Tesla’s first prototype of Optimus was launched in 2022. At that time, Musk said these general-purpose humanoid robots, which are designed to perform tasks that are dangerous, repetitive or boring for humans using advanced AI technologies, “has the potential to be more significant than its vehicle business over time.”

In addition to the Optimus project, Tesla’s core electric vehicle business is also expected to feel the impacts of China’s rare earth export restrictions.

A senior automotive executive told the Financial Times that the critical mineral restrictions would be “consequential” for Tesla, describing them as a “7 or 8” on a scale of 1 to 10 in terms of severity.

China currently produces around 90% of the world’s rare earth minerals, making it a key supplier to the US, which only has one producing rare earths mine – Mountain Pass in California.

Even as countries like the US start to explore options and ramp up production, China is still expected to dominate the global supply with a 54% market share by 2030, according to IEA projections.

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