Tesla (TSLA) Q3 2026 earnings report

Tesla reported better-than-expected third-quarter results after the bell on Wednesday, even as automotive revenue dropped. The stock was little changed in extended trading.

Here’s how the company did, compared with estimates from analysts polled by LSEG:

• Earnings per share: 48 cents adjusted vs. 43 cents estimated
• Revenue: $28.05 billion vs. $27.9 billion estimated

Tesla’s earnings report lands a day after CEO Elon Musk told investors on SpaceX’s quarterly call that it would be a “good idea” for his two companies to merge, and said the boards at both have formed special committees to discuss a possible tie-up.

“I feel like I’m tap dancing through a minefield,” Musk said on the call, responding to a question about a potential merger.

“Do I think it would be a good idea? Yes,” Musk said. “But at the end of the day, the shareholders have to be supportive of this.” On the Tesla side, that means needing a 50% vote of all shares, which is “quite a high hurdle,” he said.

Musk addressed the matter in his opening comments on the Tesla call, but didn’t provide any additional information.

“I think I said everything that should be said yesterday,” Musk said.

Tesla’s revenue was down slightly flat from a year earlier, when the company generated sales of $28.24 billion, Tesla said in its earnings deck. In Tesla’s core automotive business, revenue declined 3% from a year earlier to $20.56 billion in the quarter. Energy revenue fell 16% to $2.88 billion.

Balancing out the declines were gains in Tesla’s services and other revenue. Sales there climbed 33% from a year ago to $4.61 billion.

Tesla blamed its lackluster automotive revenue and profits on lower average sales prices for its cars during the quarter, and trouble securing battery supplies to make enough vehicles to fulfill a backlog of orders.

Net income attributable to common share holders plummeted 29% to $787 million, or 22 cents a share, from $1.11 billion, or 32 cents a year earlier, Tesla said.

The drop in profitability reflects a surge in spending on Optimus humanoid robots and other artificial intelligence initiatives. Capital expenditures more than doubled from a year earlier to $3.73 billion. Free cash flow plunged by 62% year over year to $1.53 billion, after Tesla turned free cash flow negative in the second quarter.

Tesla said uptake of its FSD (Supervised), a partially automated driving system the company sells for $99 per month in the U.S., grew by 20 percentage points from the second quarter. Active FSD subscriptions increased 67% from a year earlier to 1.74 million.

“We believe that FSD is driving demand in markets where it is available, and we continue to work with regulators to get it approved in other markets,” the company said in its investor deck.

Tesla said its auto sales in Canada, Japan, Taiwan and Australia hit…