Tesla reported a 44% year-on-year decline in third-quarter net income as higher expenditure and broadly flat revenue produced a mixed financial quarter. Net income fell to $787 million, or 22 cents per share. Adjusted earnings reached 48 cents per share, three cents above analyst expectations.
Revenue was approximately $28 billion and was essentially unchanged from the corresponding period a year earlier. It also came in slightly below market forecasts. Tesla nevertheless generated $1.5 billion in free cash flow, exceeding expectations that its AI investments would result in negative free cash flow for the quarter.
Capital expenditure doubled to $4.7 billion, although the figure remained below the level anticipated by analysts. Tesla reduced its full-year 2026 capital-spending estimate from $25 billion to $20 billion, indicating that some longer-term expenditure would be deferred as the company works to finance AI expansion through its operating cash flows.
Tesla’s driver-assistance software recorded strong uptake, with 75% of vehicles delivered in North America including a subscription to Full Self-Driving (Supervised). The company added the “Supervised” qualification after regulators challenged earlier descriptions that could imply the system was fully autonomous. Drivers using the software must remain attentive and prepared to take control.
Automotive profitability remained relatively resilient. Tesla generated 18.1 cents of gross profit for every dollar of vehicle sales during the quarter, an improvement of almost three cents from the previous year. The company had earlier disclosed quarterly deliveries of nearly 490,000 vehicles, an increase from the preceding three-month period.
The results arrived as Tesla and SpaceX established special committees to examine a possible combination. Elon Musk acknowledged the discussions during SpaceX’s earnings call but cautioned that significant hurdles remained. He declined to provide further details during Tesla’s subsequent call.
Tesla shares declined 3.2% in after-hours trading after rising 3.6% during the regular session. The market reaction reflected the balance between stronger cash generation, slowing near-term capital deployment and continued uncertainty about the pace at which Tesla’s robotaxi, AI and robotics investments will translate into commercial growth.
