Tesla posted third-quarter earnings that surpassed analyst forecasts despite headwinds in its core business segments. The electric vehicle manufacturer’s automotive revenue declined 3% from the prior year to $20.56 billion, while energy revenue fell 16% to $2.88 billion. The company attributed the automotive underperformance to reduced average selling prices and battery supply constraints affecting production capacity.
Compensating for these declines were strong results in services and other revenue, which climbed 33% year-over-year to $4.61 billion. However, net income attributable to common shareholders fell 29% to $787 million compared with $1.11 billion a year earlier. The earnings decline reflected substantial spending increases on Optimus humanoid robots and artificial intelligence initiatives, with capital expenditures more than doubling to $3.73 billion. Free cash flow plummeted 62% to $1.53 billion as the company continued investing heavily in new technologies.
Tesla’s partially automated driving system, FSD (Supervised), demonstrated growth momentum with active subscriptions increasing 67% year-over-year to 1.74 million. The company plans to introduce its forthcoming FSD (Unsupervised) system to customer vehicles in the second quarter of next year. Tesla is also developing the Cybercab, a two-seater autonomous vehicle, with plans to expand operations beyond its current Austin, Texas base this year.
Musk indicated that the company’s driverless robotaxi fleet would begin contributing to financial results in 2027 after becoming more established. He projected that growth from autonomous operations would become noticeable in the second quarter of that year and represent a significant business driver by the third or fourth quarter. The company also highlighted record auto sales in Canada, Japan, Taiwan, and Australia during the quarter, though growth in core markets remains limited as Chinese competitors gain traction with competitively priced electric vehicles.
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