Tesla released third-quarter financial results that exceeded analyst expectations, though the company’s core automotive business faced headwinds. Automotive revenue declined 3% year-over-year to $20.56 billion, while energy revenue fell 16% to $2.88 billion. The company attributed the softness to lower average vehicle prices and battery supply constraints that limited production to fulfill customer orders. These declines were partially offset by strong performance in services and other revenue categories, which climbed 33% to $4.61 billion.
Profitability metrics contracted significantly, with net income attributable to common shareholders plummeting 29% to $787 million, or 22 cents per share, compared with $1.11 billion, or 32 cents per share, a year prior. The company’s free cash flow declined 62% year-over-year to $1.53 billion as capital expenditures more than doubled to $3.73 billion, driven largely by investments in artificial intelligence and humanoid robot development. Despite these challenges, the company’s stock declined more than 3% in extended trading following the announcement.
Tesla’s partially automated driving system, FSD (Supervised), showed momentum with active subscriptions increasing 67% year-over-year to 1.74 million. The company indicated plans to provide customer access to its forthcoming FSD (Unsupervised) system around the second quarter of next year. The Cybercab robotaxi initiative continued testing, with the company projecting meaningful financial contributions beginning in 2027. Tesla reported 486,532 vehicle deliveries for the quarter, approximately 2% below year-ago levels, though the company achieved record sales in Canada, Japan, Taiwan, and Australia.
CEO Elon Musk addressed investor questions regarding a potential merger between Tesla and SpaceX, stating that boards at both companies had formed special committees to evaluate the possibility. Musk declined to elaborate on specifics, noting that relevant information had been shared during SpaceX’s quarterly call. The companies are collaborating on multiple initiatives, including a semiconductor manufacturing facility under development in Texas with Intel, which fueled speculation about a combination.
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