Key Points
- Tesla’s third-quarter revenue was essentially flat at $28.05 billion, as a 3% drop in automotive sales was offset by 33% growth in services.
- GAAP net income fell 43% to $787 million, or 22 cents a diluted share; adjusted earnings were 48 cents a share, down from 50 cents.
- Free cash flow was $1.53 billion, and the finance chief said Tesla now expects 2026 capital spending of about $20 billion.
- Active Full Self-Driving subscriptions reached 1.74 million, up from 1.04 million a year earlier.
- Elon Musk declined to add anything on a possible SpaceX merger, a day after confirming both boards had formed special committees.
Tesla earnings for the third quarter showed flat sales and a sharp drop in profit, as the electric carmaker spent heavily on artificial intelligence, robotaxis and factories while its core car business shrank slightly.
Revenue was $28.05 billion, compared with $28.10 billion a year earlier. Net income fell 43% to $787 million. On the call that followed, Chief Executive Elon Musk said he had nothing more to add about a possible merger with SpaceX.
What happened
Tesla (Nasdaq: TSLA) posted its update for the quarter ended Sept. 30 after the market closed on Wednesday, Oct. 21, in a shareholder update filed with the SEC as an exhibit to a Form 8-K.
Third-quarter results at a glance
| Measure | Q3 2026 | Q3 2025 |
|---|---|---|
| Total revenue | $28.05 billion | $28.10 billion |
| Automotive revenue | $20.56 billion | $21.21 billion |
| Energy generation and storage revenue | $2.88 billion | $3.42 billion |
| Services and other revenue | $4.61 billion | $3.48 billion |
| Income from operations | $718 million | $1.62 billion |
| GAAP net income | $787 million | $1.37 billion |
| GAAP diluted earnings per share | $0.22 | $0.39 |
| Adjusted diluted earnings per share | $0.48 | $0.50 |
| Free cash flow | $1.53 billion | $3.99 billion |
Source: Tesla Q3 2026 Update, Exhibit 99.1, Oct. 21, 2026. Net income is attributable to common stockholders.
Automotive revenue slipped 3%, and energy generation and storage revenue fell 16%. Services and other, which includes Supercharging, insurance and the Robotaxi business, rose 33% to $4.61 billion.
Profitability on sales improved. Gross profit rose to $5.49 billion from $5.05 billion, lifting the gross margin by 1.6 percentage points. But operating expenses jumped to $4.78 billion from $3.43 billion, led by research and development, and income from operations fell 56% to $718 million.
Adjusted earnings per share came in above analysts’ average estimates compiled by LSEG and by Bloomberg, according to CNBC and Yahoo Finance.
Tesla delivered 486,532 vehicles, down 2% from a year earlier, and produced 464,391, up 4%. The company said it produced and delivered its 10 millionth vehicle during the quarter. Energy storage deployments were 13.7 gigawatt-hours, up from 12.5 a year earlier.
Latest development
Musk addressed the merger question in his opening remarks. “With regard to a potential merger with SpaceX, I think I said everything that should be said yesterday, tap dancing through a minefield there,” he said, according to a call transcript published by StockAnalysis. Head of investor relations Travis Axelrod later said Tesla would not take any questions on the topic.
What is confirmed
- On Tuesday’s SpaceX call, Musk said both companies had formed special committees of independent directors to study a combination, as LiveNewsWorld reported from SpaceX’s results.
- Tesla holds a SpaceX stake. Its filing shows a $2.0 billion purchase of SpaceX equity in the first quarter and a $142 million unrealized loss on that investment in the third quarter.
What remains uncertain
- Tesla gave no new information on merger terms, timing or a shareholder vote.
- Musk said on Tuesday that the committees had not agreed on any terms and that a deal was not guaranteed.
Why it matters
Tesla is one of the most widely held U.S. stocks, and the quarter showed where its money is going. Capital expenditures more than doubled to $4.73 billion from $2.25 billion a year earlier. Even so, operating cash flow of $6.26 billion left free cash flow positive at $1.53 billion, after a negative $1.09 billion in the second quarter. Cash, cash equivalents and short-term investments rose to $45.45 billion.
Chief Financial Officer Vaibhav Taneja said on the call that Tesla was “revising our CapEx guidance to be approximately $20 billion for the current year” and planned to fund it “primarily from our cash flows from operations.” He said Tesla had also secured the capacity to borrow up to $30 billion but did not plan to draw on the new facilities this calendar year.
The software side is growing. Active Full Self-Driving (Supervised) subscriptions rose 67% to 1.74 million. Tesla said it began Robotaxi rides using Cybercabs in Austin on Sept. 3 and that cumulative unsupervised Robotaxi miles grew eightfold from the second quarter.
What happens next
Asked when Robotaxi would show up in revenue, Musk said it was “not going to move the needle this quarter” but “starts to become noticeable probably in Q2 and then probably a big deal by Q3 or Q4 of next year,” according to the transcript.
In its outlook, Tesla listed Cybercab in production in Texas, the updated Semi in production in Nevada and Optimus in an early ramp in California. Megafactory Texas began production of Megapack batteries, with planned capacity of 50 gigawatt-hours.
Investors will also watch whether the special committees at Tesla and SpaceX produce a formal proposal. Neither company has announced terms.
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Sources
- Tesla Q3 2026 Update, Exhibit 99.1 to Form 8-K (SEC, Oct. 21, 2026)
- StockAnalysis: Tesla Q3 2026 earnings call transcript (Oct. 21, 2026)
- CNBC: Tesla third-quarter earnings report (Oct. 21, 2026)
- Yahoo Finance: Tesla Q3 earnings, free cash flow and capex (Oct. 21, 2026)
