Tesla has quietly leased a large advanced manufacturing space near its flagship electric vehicle factory in Silicon Valley as it aims to shift from a car company to one that also specializes in humanoid robots and other artificial intelligence innovations.
The Austin, Texas-based EV maker finalized a lease late last month for a 267,099-square-foot industrial property developed by Hines that finished construction just last year in Fremont, California, according to people with knowledge of the deal.
Meanwhile, the property's owners, Hines and Oaktree Capital Management, have listed the fully leased property, known as Milmont Industrial, for sale this week via Cushman & Wakefield. The real estate services firm had not yet released marketing materials for the property and declined to comment on the offering.
The advanced manufacturing hub is where Tesla first began turning out its Model S sedans in 2012 that were credited with helping make electric cars mainstream. Now the company is betting on cutting-edge technology and investor enthusiasm around all things artificial intelligence to bolster Tesla’s “shift to an autonomous future,” as Chief Executive Officer Elon Musk put it in a recent earnings call.
Hines and Oaktree purchased the 14-acre redevelopment property in the heart of Fremont’s Advanced Manufacturing Row back in 2021, noting strong demand for modern industrial spaces among tech-focused tenants. It turned three buildings into a single 21st-century factory space with “high clear heights, heavy power, ample parking and loading docks” as well as easy access to a nearby freeway and public transit.
Tesla, for its part, has been expanding its footprint in Fremont in the years since it relocated its headquarters to Texas in 2021. Last month, the company leased a 108,000-square-foot research and development facility at 45401 Research Ave., a stone’s throw from its Fremont factory.
Property pivot
It’s not clear whether the firm will use that facility — or the Milmont Industrial campus that’s more than twice its size — for robotics or cars, or both, and Tesla did not respond to requests for comment. But AI innovation is likely to play a role as the technology remains embedded in each of the company’s business lines.
The firm told investors it plans to phase out production of the Model S and Model X vehicles in favor of building out its Optimus program at its Fremont factory at 45500 Fremont Blvd. Those models are Tesla’s most expensive vehicles, starting at about $95,000 and $100,000 respectively, according to the company’s website. Tesla’s lower-priced Model 3 sedan and Model Y SUV account for the vast majority of its sales, some 97% of its 1.59 million vehicle deliveries last year.
Tesla is seeing a slowdown in vehicle sales in the wake of what the recent earnings report described as its “transition from a hardware-centric business to a physical AI company."
This quarter, the company plans to unveil the Gen 3 version of Optimus, its first mass production design of the humanoid robot designed to observe and duplicate human tasks. Currently, these robots are able to perform basic tasks within Tesla’s industrial facilities, executives said during the recent earnings call.
Tesla aims to begin production by the end of this year on Optimus Gen 3 with a goal of building 1 million robots per year in Fremont. Musk previously predicted that Tesla would produce 5,000 robots in 2025, though it's unclear whether he met that milestone.
Videos circulated online recently show the potential of the Optimus robots, which Musk has called “the biggest product of all time, by far,” doing tasks from working on factory assembly lines to flipping burgers at McDonalds to serving popcorn at movie theaters.
"Forget the Tesla you knew. The Tesla of yesterday is gone," Canaccord Genuity analyst George Gianarikas wrote in a note to investors. "We believe Elon Musk has reached a definitive burn-the-ships inflection point, a total commitment to a vision that leaves no room for retreat."
Growing in Fremont
Tesla is already hiring engineers and other skilled workers for Optimus in Silicon Valley, where there is a concentration of the types of skilled AI employees needed to build high-tech products.
Fremont has been a central hub for Tesla's EV manufacturing since 2010, when the company repurposed the former General Motors plant that dated back to the early 1960s. The company is Fremont's largest employer with around 30,000 people.
Fremont’s Warm Springs District has emerged as a hub for firms such as Zoox, Seagate, Western Digital, ThermoFisher Scientific, and FM Industries that make products from semiconductors to so-called clean technology. The area’s concentration of tech companies and access to skilled workers has made it attractive for manufacturers requiring specialized facilities with heavy power and modern specifications in the era of artificial intelligence.
“We have the most advanced manufacturing in the state of California,” Mayor Lily Mei said during a groundbreaking event for Milmont Industrial in 2024.
With a long history in auto manufacturing, Fremont pivoted to semiconductor and electronics manufacturing in the early days of the personal computer revolution. Seven of the world’s 10 largest AI data center server manufacturers now have a presence in Fremont, including Quanta Computer, Wistron, Mitec, TD Synnex and Supermicro.
The East Bay saw one of its lowest years for industrial investment activity in 2025, with investors taking a more cautious approach as the impact of tariffs plays out on tenant demand, noted CoStar Director of Senior Analytics Nigel Hughes.
Still, Fremont remains one of the East Bay's most dynamic hubs. Leasing momentum increased in 2025, as technology tenants expanded into advanced manufacturing spaces. Fremont saw several lease deals in the market last quarter by companies including MiTAC Information Systems Corp., the U.S. subsidiary of Taiwan-based MiTAC Holdings, which inked 253,472 square feet at 47100 Lakeview Blvd. in addition to nearly 350,000 square feet it had leased at the Fremont Technology Center.