Tesla reported third-quarter results that topped Wall Street’s earnings expectations on Wednesday, although revenue came in slightly below consensus and automotive sales declined. Its shares fell more than 3% in after-hours trading.
The electric vehicle maker posted Q3 revenue of $28.05 billion, compared with Bloomberg’s consensus estimate of $28.13 billion. Adjusted earnings per share (EPS) came in at $0.48, beating the $0.44 estimate, while adjusted EBITDA reached $3.90 billion versus expectations of $3.66 billion.
Tesla $TSLA did not sell any Bitcoin in Q3 2026, leaving its $972 million BTC holdings unchanged.
Automotive Revenue Declines as Free Cash Flow Turns Positive
Revenue from Tesla’s core automotive business fell 3% year over year to $20.56 billion, while energy revenue declined 16% to $2.88 billion.
The services and other segment provided an offset, with revenue rising 33% from a year earlier to $4.61 billion.
Tesla attributed the weakness in automotive revenue and profitability to lower average vehicle selling prices and difficulties securing sufficient battery supplies to meet its order backlog.
GAAP net income attributable to common stockholders was $787 million, down 43% from $1.37 billion in Q3 2025.
The decline in profitability came as Tesla increased spending on its Optimus humanoid robot program and other artificial intelligence initiatives.
Free cash flow, however, came in well above expectations at $1.53 billion, compared with an estimated outflow of $4.92 billion. Capital expenditures totaled $4.732 billion, below the $7.96 billion analysts had projected.
During the earnings call, Tesla lowered its full-year capital expenditure forecast to $20 billion from its previous estimate of $25 billion. CFO Vaibhav Taneja attributed the reduction to "managing our capital deployment efficiently, and plan to fund [capex] primarily from our cash flows from operations," he said.
Tesla plans to direct investment toward Optimus production lines, AI computing infrastructure, the Cybercab rollout and the Terafab chip facility it is developing with SpaceX.
The company also disclosed that its Optimus robot had begun production at its Fremont factory. "While we will continue to iterate on the hardware and manufacturing process, we have proven that the current manufacturing process for Optimus is suitable for a commercial product," Tesla said in its earnings release.
Beyond robotics, Tesla aims to expand its AI training capacity to 400 MW by year-end. The company also reported that active subscriptions to its Full Self-Driving (FSD) service had increased to 1.74 million.
Potential SpaceX Deal Remains Uncertain
CEO Elon Musk has also fueled speculation about a potential combination involving Tesla and SpaceX, his aerospace company.
"I think both SpaceX and Tesla have formed special committees to discuss this idea," Musk said during SpaceX's earnings call on Tuesday night. "At the request of shareholders, and these special committees consist of independent directors. And because I'm a conflicted party, I can't actually be in the discussions of the special committees."
He added, "I don't think we should necessarily assume that I think some people out there assume that a SpaceX and Tesla merger is a certainty. And I think that would be overstating it. Do I think it would be a good idea? Yes."
Tesla delivered 486,532 vehicles in Q3, down 2% year over year but above Bloomberg’s consensus estimate of 463,000. Energy storage deployments reached 13.7 GWh, up from 12.5 GWh a year earlier and 13.5 GWh in the second quarter.
Meanwhile, Tesla launched commercial Cybercab service in Austin on Sept. 3, drawing scrutiny from federal regulators. The National Highway Traffic Safety Administration (NHTSA) issued a special order containing 21 requests for information on how Tesla self-certified the steering-wheel-free, pedal-free vehicle as compliant with federal safety standards. Tesla sought an extension until Nov. 20, but the agency granted an additional 30 days, setting the response deadline for Oct. 30.
Tesla also unveiled its long-delayed Roadster last Thursday at a SpaceX facility in Waco, Texas. During the event, the vehicle used cold-gas thrusters to leap over several Tesla cars, including a Semi truck. Tesla said the Roadster completed a 0-to-60 mph test in 0.81 seconds, while Musk indicated that production is expected to begin in 2028.