President Trump and Mr. Musk: Peace Through Robots?

Assuming it gets back on track, Trump’s three-way deal on rare earths from Ukraine and Russia might be the key to peace. And the idea appears to have Elon’s fingerprints all over it.

We do not blame anybody but Putin and Russia for the intolerable cruelty and destruction of that war. Attempts to go beyond proximate causes (the thief stole my stuff) to “root causes” (he was poor) create moral confusion.

Nevertheless, the background to the war is the failure, post-1992, to integrate Russia into Europe. Mr. Musk—if we are guessing right—may have found a way. And it all comes down to what Tesla is really selling, which is not cars but intelligence, albeit of the artificial variety.

The future of artificial intelligence is unfolding in distinct phases. The first phase, Generative AI, consists in models like OpenAI’s GPT and Google’s Gemini creating text, images, and even code.

The next phase, Agentic AI, is pushing beyond static outputs to autonomously reasoning, planning, and executing complex tasks, forming the backbone of intelligent assistants and AI-powered decision-making systems. (We’ve covered some promising “agentic” startups in Gilder’s Private Reserve.)

The final frontier lies in Physical AI—where intelligent models act in the physical world.

Physical AI will manifest in two key applications: humanoid robots and self-driving vehicles. These systems require advanced sensor fusion, real-time decision-making, and precise actuation, making them the most complex AI-driven machines ever built.

Tesla is at the center of this transition, leveraging its AI expertise from self-driving technology and neural network training to develop Optimus, a humanoid robot designed to integrate into factories, logistics, and, eventually, consumer environments.

Tesla Optimus: The vanguard of physical AI

Tesla’s Optimus Gen 3 humanoid robot is a direct extension of the company’s AI capabilities, incorporating advances in computer vision, reinforcement learning, and real-time actuation.

The current iteration of Optimus boasts over 60 degrees of freedom, including 28 degrees in its body and limbs and 34 degrees in its dexterous hands, enabling it to perform tasks such as lifting, assembling, and fine motor operations. Unlike earlier humanoid robots, which were constrained by rigid programming and limited autonomy, Tesla’s Optimus is built on an end-to-end AI control system that allows for self-learning and adaptation.

Beyond Tesla, humanoid robots are advancing rapidly, with China, Japan, South Korea, and U.S. startups aggressively investing in AI-driven automation. China’s national policy initiatives have already injected hundreds of billions of yuan into humanoid robotics, supporting companies such as UBTECH, Yushu Technology, and Zhiyuan Robotics. Meanwhile, Figure AI, Agility Robotics, and Sanctuary AI are leading North American efforts to commercialize humanoid robots in logistics, industrial automation, and health care.

Tesla’s vertical integration of AI, energy storage, and advanced materials gives it a strategic advantage over traditional robotics firms. The true enablers of Physical AI, however, are advanced materials and power-efficient actuators, which bring us to the key underlying technology—rare earth permanent magnets.

And who do the robots need? Ukraine and Russia!

The precise movement and lifelike mobility of Tesla’s Optimus and other humanoid robots depend on an intricate system of high-torque electric actuators and servos. These depend on neodymium-iron-boron (NdFeB) permanent magnets, the most powerful and efficient magnetic materials currently available. The magnets provide the necessary torque and power density for robots to lift and carry objects, power extended operation on batteries power, and enable smooth, dynamic movement.

Tesla’s Optimus is estimated to require 3.5 kg (almost eight pounds) of NdFeB per unit. If production scales to 100,000 robots annually, that would increase demand for the global rare earth magnets by .27%. At a million robots annually demand rises by 2.69%. As successive generations of the robots fulfill their potential, expect demand to imitate demand for the family car circa 100 million units worldwide. That would require some 350,000 tons of NdFeB per year, nearly triple the total projected global production of high-performance rare earth magnets in 2025. If humanoid robots reach just 50 million units annually by 2030, demand for NdFeB could exceed the entire global NdFeB supply of 2025. (See Table 1)

Table 1: Estimated Rare Earth Demand for Humanoid Robots (2025-2030)

Where will rare earths come from? The current answer is China, which currently processes over 85% of the world’s NdFeB magnets.

Nobody (except China) likes that answer.

Happily, both Russia and Ukraine hold substantial untapped rare earth reserves. Trump’s discussions with Ukraine apparently focus on long-term extraction agreements, infrastructure investments, and potential military or economic incentives to facilitate U.S. access. Apparently, similar topics have been discussed with Russia.

What might come of a Russia, Ukraine, U.S. agreement around rare earth development if it happens?

• Peace, whether as consequence or requirement: can’t do development in a war zone.
• China would be at least irritated at Russia undercutting its near monopoly. Never mind any dramatic realignment separating Xi from Putin. More relevant is what the Soviets used to call “the objective correlation of forces.” China and Russia are natural enemies, their alliance pushes uphill and can ill afford such irritations.
• With peace made, and the United States extracting minerals in Russia as well as Ukraine, the U.S. can hardly object to Europe buying petroleum from Russia. That’s a double helping of economic integration at one blow.

We don’t predict, we merely envision. And the incentives for the United States to do a deal are huge.

As Elon Musk pushes forward with the commercialization of Tesla’s full self-driving capabilities and Optimus, the question is no longer whether Tesla can scale production—it’s whether it can secure the materials and supply chains necessary to make humanoid robots as ubiquitous as electric vehicles and soon to flourish full-self-driving Teslas. With rare earth permanent magnets as a critical bottleneck, the future of humanoid robotics will be shaped as much by policy decisions in Washington and Beijing, Moscow and Kiev.

Thus, our “wish we were a fly on that wall” speculation. Given Musk’s role as an advisor to Trump we’d love to know if his concerns for securing rare earths influenced the administration’s hard push for a rare-earths deal. If Tesla’s need for rare earths to power Optimus helps prompt one of the most dramatic and benign geopolitical realignments since 1992, all we can say is let’s go Elon!

George Gilder is the Editor-in-Chief of the Gilder Technology Report. His colleague Dr. Robert Castellano also writes at Dr. Robert Castellano’s Semiconductor Deep Dive.