Tesla seems to have earned less in its third quarter than a year earlier while still producing more cash than Wall Street expected, which Reuters ties to spending far less on AI and robotics than analysts had forecast. The company posted its Third Quarter 2026 Update on Wednesday, Oct. 21, and attached it to an 8-K filing with the Securities and Exchange Commission. Its financial summary lists GAAP net income attributable to common stockholders of $787 million, or 22 cents a diluted share, against $1,373 million, or 39 cents, in the same quarter of 2025. On a non-GAAP basis, the table shows 48 cents a share, down from 50 cents.
Tesla calls revenue roughly flat. Its table puts it at $28,046 million, against $28,095 million a year earlier, and the update describes it as “roughly flat YoY at $28.0B.” CNBC says the result beat the $27.9 billion that analysts polled by LSEG expected, and that adjusted earnings of 48 cents topped a 43-cent estimate. Reuters puts the revenue expectation at $27.88 billion. Axios, by contrast, says revenue missed expectations of $28.2 billion and that net income, which it says fell 43%, trailed expectations of $925 million. CNBC and Reuters cite LSEG data; Axios does not name the source of its revenue and profit estimates.
Reuters leads with the cash figures. Tesla’s update lists $6,263 million in operating cash flow, $4,732 million in capital expenditures and $1,531 million in free cash flow, and says cash, cash equivalents and short-term investments rose by $1.9 billion to $45,447 million. Reuters calls the free cash flow a surprise, saying analysts on average had expected cash burn of $4.92 billion and $7.5 billion in capital spending, per LSEG data; Reuters adds that capex still came in at more than double the year-earlier level. Axios also says capex more than doubled, against an S&P Capital IQ expectation of $7.8 billion. The update itself shows $2,248 million in capex and $3,990 million in free cash flow in the third quarter of 2025.
Inside the business, the update shows automotive revenue at $20,560 million, against $21,205 million a year earlier, and energy generation and storage revenue at $2,881 million, against $3,415 million. Services and other revenue rose to $4,605 million from $3,475 million. Tesla lists among the year-over-year drags a decrease in energy revenue “partially due to tariff-related customer refunds,” a lower average selling price, lower regulatory credit revenue and fewer deliveries. CNBC puts the auto decline at 3%, the energy drop at 16% and the services gain at 33%. Reuters, citing Visible Alpha data, says automotive gross margin excluding regulatory credits reached 18.1%, above analysts’ estimate of 16.7%.
Tesla attributes its limited car volumes to battery supply rather than demand. “We ended the quarter with the largest backlog for our passenger vehicles in four years,” the update says, adding that “battery availability continued to be the limiting factor in increasing auto volumes in the quarter.” Its operational summary lists 486,532 deliveries, down 2% from 497,099, and 464,391 vehicles produced, up 4%. Tesla reports record quarterly deliveries in Canada, Australia, Japan and Taiwan and record production at Gigafactory Berlin. Reuters says Tesla now looks on track to raise annual deliveries for the first time in three years.
The update also reports progress on newer products. Tesla says it “started providing Robotaxi rides using Cybercabs on September 3 in Austin,” that “Optimus production began in Fremont on our high-volume lines,” that Megafactory Texas began production with a planned capacity of 50 GWh, and that it plans to reach 400 MW of SI training compute by the end of the year, per the filing. Active FSD subscriptions reached 1.74 million, against 1.04 million a year earlier. “We believe that FSD is driving demand in markets where it is available,” the company writes. On the earnings call, Musk said of the Robotaxi fleet, per CNBC, “It's not like going to move the needle this quarter,” adding, “I think it starts to become noticeable in Q2 and then probably a big deal by Q3 or Q4 of next year.” Axios quotes him on the humanoid robot: “I remain convinced that Optimus will be the biggest product on earth.”
The results land a day after Musk spoke on SpaceX’s own earnings call about a possible combination of his two companies. CNBC says Musk told SpaceX investors a merger would make a “good idea” and that the boards of both companies have formed special committees to discuss it; it quotes him: “Do I think it would be a good idea? Yes.” Axios says he told investors he may not take part in the talks. On Wednesday’s Tesla call, both CNBC and Axios quote him: “I think I said everything that should be said yesterday.” Thomas Monteiro, a senior analyst at Investing.com, told Reuters: “The merger still faces a high bar, but tonight’s numbers make the financial logic harder to ignore.”
Early market reactions differ by outlet. CNBC says the stock looked little changed in extended trading, Reuters says shares fell 1.8% after hours, and Axios says they rose 1.7%. Reuters and CNBC both say the shares have lost about 14% this year. Ryan Lee of Direxion told Reuters, “Lower capex suggests less of an ’all-in’ approach to the AI arms race than one would expect from Elon.”
