Tesla Q3 profit falls 43% but cash flow beats forecasts

Tesla generated $1.53 billion in free cash flow in the third quarter, while Wall Street had expected it to burn several billion dollars. Revenue of $28.05 billion came in above the LSEG analyst consensus of $27.88 billion, Reuters reported. Profit still fell. GAAP net income dropped 43% to $787 million, or $0.22 per share, as spending on artificial intelligence and the Optimus robot grew faster than gross profit.electrek.co+1

Whether revenue counts as a beat depends on the estimate used. Revenue was nearly flat from $28.10 billion a year earlier, and it fell just short of the $28.13 billion Bloomberg consensus. Adjusted earnings of $0.48 per share beat the $0.44 estimate.ca.investing.com+1

Cash flow and spending

Capital spending was $4.73 billion, compared with the $7.96 billion analysts had forecast. Free cash flow beat an estimate of negative $4.92 billion. The Wall Street Journal News Corp ↗ 2.03%, citing FactSet, put the expected cash burn at $4.3 billion, and Tesla shares rose after the report. Tesla has guided for more than $25 billion in capital spending in 2026, up from about $8.5 billion last year. The money is going to Optimus production lines, AI computing, the Cybercab ramp and a Terafab chip plant being built with SpaceX.sg.finance.yahoo.com+1

Operating expenses rose 39% to $4.78 billion. Research and development jumped 69% to $2.76 billion, and operating income fell 56% to $718 million, according to Electrek. Total gross margin improved to 19.6% from 18.0% a year earlier. Automotive margin excluding regulatory credits recovered to 18.1%.electrek.co

Deliveries and energy

Tesla delivered 486,532 vehicles, down about 2% from a year earlier but well above expectations of about 461,100. Deliveries exceeded production by more than 22,000 vehicles, which drew down inventory. Tesla said that "battery availability continued to be the limiting factor" on vehicle volumes.ca.investing.com

Energy storage deployments rose to 13.7 gigawatt-hours from 12.5 a year earlier, but that missed the roughly 15.9 analysts expected. Energy revenue fell 16% to $2.88 billion, which Tesla partly blamed on refunds to customers related to tariffs.electrek.co

Autonomy and the SpaceX question

Active Full Self-Driving subscriptions reached 1.74 million, and the Robotaxi service passed nearly 2 million cumulative unsupervised miles. The results arrived while investors are weighing a possible merger with SpaceX. Elon Musk said on October 20 that both companies had formed special committees to discuss a deal. Musk said a combination "would be a good idea". Management is scheduled to take questions on the earnings call at 5:30 p.m. ET.wsj.com+2