Tesla's third-quarter net income falls 42.7% as capital spending more than doubles

Tesla (Nasdaq: TSLA) reported third-quarter revenue of $28.05 billion, down 0.2% from a year earlier, and net income attributable to common stockholders of $787 million, down 42.7%, according to its quarterly update filed with the Securities and Exchange Commission.

What happened

Total revenue was $28,046 million, against $28,095 million in the third quarter of 2025. Automotive revenue fell 3.0% to $20,560 million from $21,205 million. Energy generation and storage revenue was $2,881 million, down from $3,415 million, while services and other revenue rose to $4,605 million from $3,475 million.

Gross profit rose to $5,494 million from $5,054 million, lifting the gross margin to 19.6% from 18.0% (computed). Operating expenses grew 39.2% to $4,776 million from $3,430 million, and income from operations fell to $718 million from $1,624 million.

Net income attributable to common stockholders was $787 million, or $0.22 per diluted share, compared with $1,373 million, or $0.39, a year earlier. On a non-GAAP basis, which excludes certain items, earnings were $0.48 per share compared with $0.50.

Capital expenditures were $4,732 million, up from $2,248 million. Operating cash flow was $6,263 million, and free cash flow, which is operating cash flow minus capital expenditures, was $1,531 million compared with $3,990 million. Cash, cash equivalents and short-term investments were $45,447 million.

Operations

Tesla delivered 486,532 vehicles, 2.1% fewer than the 497,099 a year earlier, and produced 464,391. The company said that "battery availability continued to be the limiting factor in increasing auto volumes in the quarter," while adding that it had made "additional progress in securing future supply."

Storage deployments were 13.7 gigawatt-hours, up from 12.5 a year earlier. Active subscriptions to its Full Self-Driving software, with active driver supervision required, were 1.74 million, up from 1.04 million.

Tesla said it "started providing Robotaxi rides using Cybercabs on September 3 in Austin" and that production has begun for the Tesla Semi in Nevada and its Optimus robot in Fremont, California. It also said it "ended the quarter with the largest backlog for our passenger vehicles in four years," that Megafactory Texas "began production, with planned capacity of 50 GWh," and that it produced and delivered its 10 millionth vehicle.

Market reaction

Tesla shares ended Thursday down 3%, according to Yahoo Finance, even though adjusted earnings per share were above the $0.44 estimate it cited. Revenue was slightly below the $28.13 billion estimate. Yahoo Finance said investors weighed lower capital spending planned for 2026 against higher spending planned for 2027 and 2028 on Optimus, Cybercab and a project named Terafab.

What to watch

Tesla said battery supply limited automotive volumes in the third quarter. Its next deliveries report will show whether progress in securing supply translates into higher output.

Free cash flow is another figure to follow: it fell to $1.53 billion in the third quarter from $3.99 billion a year earlier as capital spending rose, and Tesla said it continues to invest across artificial intelligence, robotics and energy.