Tesla’s third-quarter results showed stronger-than-expected profitability and cash generation, offsetting a decline in its main vehicle business. The figures gave investors a mixed view of the company’s performance, with earnings and free cash flow ahead of expectations while automotive revenue continued to soften.
Revenue for the quarter was $28.05 billion, slightly below the Bloomberg consensus estimate of $28.13 billion. Adjusted earnings came in at $0.48 per share, topping the $0.44 forecast, while adjusted EBITDA reached $3.90 billion compared with expectations of $3.66 billion.
The company’s automotive division generated $20.56 billion in revenue, down 3% from the same period last year. Tesla attributed the weaker vehicle revenue and profit performance to lower average selling prices and constraints in securing enough batteries to meet pending vehicle demand.
Energy revenue also moved lower, falling 16% to $2.88 billion. The decline was partly offset by the services and other segments, where revenue rose 33% year-on-year to $4.61 billion.
Cash flow was a key positive in the quarter. Tesla posted free cash flow of $1.53 billion, compared with an estimated cash outflow of $4.92 billion. Capital spending reached $4.732 billion, below the $7.96 billion estimate.
Tesla also reduced its full-year capital expenditure outlook to $20 billion from a previous projection of $25 billion. Chief Financial Officer Vaibhav Taneja said on the earnings call that the company expects to lower spending through tighter capital allocation and intends to fund investment largely through operating cash flow.
Those investments are directed toward Optimus production capacity, AI computing infrastructure, the Cybercab rollout and the Terafab chip facility being developed with SpaceX.
Tesla said its Optimus robot has entered production at the Fremont plant. The company said the current production method has demonstrated that Optimus can be manufactured for a commercial product, though hardware and factory processes will continue to be refined.
Elon Musk told analysts that reaching an annualized pace of 1 million Optimus units could take at least a year, and possibly longer, from the point of scaling to 20,000 units per week. He also said Tesla may release an Optimus demonstration video in about a month, with the aim of showing robot movement that is not pre-programmed.
Vehicle deliveries totaled 486,532 in the third quarter, down 2% from a year earlier but above the Bloomberg consensus of 463,000. Energy storage deployments reached 13.7 GWh, compared with 12.5 GWh a year earlier and 13.5 GWh in the second quarter.
Tesla said vehicle sales in Canada, Japan, Taiwan and Australia reached quarterly records. Still, growth in the company’s core market has been limited recently as Chinese electric-vehicle manufacturers, including BYD and Xiaomi, gained traction in Asia and Europe with lower-cost and feature-heavy models. Tesla was also affected last year by the expiration of a federal EV tax credit.
Taneja said Tesla plans to expand Cybercab activity beyond Austin, Texas, this year, while monitoring operating expenses such as maintenance, charging, and cleaning. Musk said Tesla’s driverless Robotaxi fleet is expected to begin contributing to financial results in 2027. According to the Texas Department of Motor Vehicles, the fleet includes 362 Model Y Robotaxis and 449 Cybercab vehicles cleared for driverless operations in the state.
One major Tesla investment is a semiconductor plant being developed with SpaceX and Intel in Grimes County, Texas. The chip project, along with other overlapping work between Musk’s companies, including Tesla’s refreshed Roadster, has fueled speculation about a possible combination of Tesla and SpaceX.
