Tesla Posts Q3 Revenue In Line But Profit Slides Again

Tesla released its third-quarter 2026 financial results after market close today, reporting revenue that matched analyst forecasts while profit continued to decline. The company's earnings call with management is scheduled for 5:30 p.m. ET.

Revenue came in at $28.05 billion, essentially flat compared to a year ago and closely aligned with the $28.06 billion consensus figure. Non-GAAP earnings reached $0.48 per share, surpassing the $0.45 per share projection from analysts, though the figure was down 4% from $0.50 per share in the same quarter last year.

Tesla's vehicle deliveries totaled 486,532 units for the quarter, a 2.1% decrease year-over-year but higher than the 461,974 units expected by consensus. Production, however, was lower at 464,391 vehicles, and energy storage deployments reached 13.7 GWh, up from 12.5 GWh a year ago but below the roughly 15.9 GWh analysts had anticipated.

While gross margins recovered, with total gross margin rising to 19.6% from 18.0% a year ago and automotive gross margin excluding regulatory credits reaching 18.1%, up from 16.3% in the second quarter, operating income fell 56% to $718 million. This decline was driven by a 39% increase in operating expenses to $4.78 billion, with research and development spending jumping 69% to $2.76 billion as Tesla invests in what it calls "Super Intelligence," Optimus, and the Cybercab. On a GAAP basis, net income decreased 43% to $787 million, or $0.22 per share.

Capital spending for the quarter was $4.73 billion, more than double the $2.25 billion spent a year earlier, bringing the total for the first nine months of 2026 to $13.01 billion. This is roughly half of the more than $25 billion in capital expenditures management guided for the year, meaning Tesla would need to spend approximately $12 billion in the fourth quarter to meet that target. Free cash flow was $1.53 billion for the quarter, compared to $3.99 billion a year ago and negative $1.09 billion in the second quarter, with Tesla ending the period holding $45.4 billion in cash and investments.

Tesla attributes the flat sales volume to battery availability, stating it continued to be the limiting factor in increasing auto volumes and that the company ended the quarter with the largest passenger vehicle backlog in four years. Deliveries exceeded production by 22,141 vehicles, reducing inventory to 11 days of supply from 15 days in the second quarter. On the energy side, revenue from generation and storage fell 16% to $2.88 billion, which Tesla partly attributes to tariff-related customer refunds, though segment gross margin rose to 33% from 20% in the prior quarter. Services and other revenue grew 33% to $4.61 billion, with gross profit in that segment reaching a record $734 million driven by charging, insurance, and parts sales.

Looking ahead, Tesla's ability to meet its capital spending guidance and manage costs tied to AI and robotics development will be closely watched, as operating expenses continue to rise faster than gross profit. The company's Robotaxi service has reached nearly 2 million cumulative unsupervised miles, and active FSD subscriptions stand at 1.74 million, up 67%, though that count includes upfront purchases as defined in Musk's 2025 pay package. Management will discuss the results further during the scheduled earnings call.

Tesla's full Q3 2026 shareholder deck is available on the company's investor relations site.