Tesla’s head of Optimus humanoid robot leaves the ‘$25 trillion’ product behind

Milan Kovac, Tesla's VP in charge of the Optimus humanoid robot program, is departing after nine years, citing personal reasons. The exit comes as CEO Elon Musk has touted Optimus as a potential $25 trillion revenue driver for Tesla, claims that contrast sharply with current market estimates for the entire humanoid robot sector, which are in the single-digit billions. Kovac's departure follows a recent trend of talent leaving Tesla and raises questions about the near-term feasibility of Musk's ambitious projections for the Optimus program.

Analysis

Milan Kovac, Tesla's Vice President overseeing the Optimus humanoid robot program, has announced his departure after nine years with the company, citing personal reasons. This exit is notable as it occurs shortly after CEO Elon Musk asserted that Optimus could propel Tesla to a $25 trillion valuation, claiming potential annual revenues of $10 trillion from the program. These projections starkly contrast with current industry estimates, which place the humanoid robot market in the low single-digit billions, with growth forecasts to between $15 billion and $80 billion by 2032. Kovac, who previously led Autopilot software engineering from 2019 to 2022 before transitioning to the Optimus program, was considered a key technical executive. His departure contributes to a pattern of talent attrition at Tesla, including another Optimus engineer, Zackary Bernholtz, who recently joined competitor Figure. While Tesla has demonstrated progress with Optimus, skepticism persists, partly due to concerns about the use of teleoperation in previous demonstrations. The humanoid robot sector is becoming increasingly competitive, with players like Unitree in China and Figure in the US making significant advancements. Kovac's departure, despite his stated support for Musk and Tesla, raises questions about the internal view of the Optimus program's ambitious timeline and its potential for near-term multi-trillion-dollar impact, especially given the strong negative sentiment (TSLA: -0.8) associated with this news.

Key Decisions for Investors

• Investors should exercise caution regarding the timeline and financial contribution of the Optimus program to Tesla's valuation, given the departure of its lead executive and the significant disparity between CEO projections and current market estimates.
• Monitor Tesla's ability to retain key technical talent in critical future growth areas like robotics and AI, as further high-profile departures could signal deeper challenges or impact development velocity.
• Closely track competitive developments in the humanoid robot space from companies like Figure and Unitree, as the field is nascent and Tesla's leadership is not yet established.
• Consider the possibility that Kovac's departure, despite stated personal reasons, may reflect internal skepticism about the aggressive Optimus targets or a challenging development environment within Tesla for this specific program.