Tesla profit drops 43% despite $1.5 bn cash flow

Tesla's third-quarter revenue was $28 billion, below a $28.3 billion company-compiled analyst forecast, as net income fell 43% to $787 million, Euronews with AP said in an Oct. 22 news article.

The 2026 capital-spending plan fell to about $20 billion from more than $25 billion, making cash generation central as Tesla and SpaceX explore a tie-up involving companies valued at about $3.5 trillion combined.

Adjusted earnings were 48 cents a share, 3 cents above Wall Street analyst expectations. Tesla generated $1.5 billion of free cash flow, meaning cash left after investment needed to sustain operations, though that was 62% lower than a year earlier.

Analysts had expected Tesla to consume cash because of heavy spending on artificial intelligence, robotics and autonomous transport. "It seems Tesla is taking a more capital-efficient approach, delaying longer-term projects to be able to self-fund their AI growth," Morningstar analyst Seth Goldstein said.

Profit was weighed down by a small decline in auto sales and lower revenue from regulatory credits, payments tied to emissions compliance, and from energy generation and storage. Capital expenditure in the quarter reached $4.7 billion, more than twice the level a year earlier, but below the larger increase analysts had expected.

Tesla said automotive gross margin excluding regulatory credits rose to 18.1% in the three months through September from 15.4% a year earlier. More than 75% of new vehicles delivered in North America included a paid subscription sign-up for Full Self-Driving (Supervised), a driver-assistance product that still requires active supervision and does not make the car autonomous.

Tesla had previously reported 486,532 vehicle deliveries in the quarter, up from 480,126 in the previous three months but 2% lower than a year earlier. Musk said the company aimed to produce about 5 million vehicles a year by around 2030, compared with roughly 1.65 million in 2025. "After many years of sort of grind and things being fairly flat, I think we're now headed for a lot of fun and significant growth," Musk said.

The possible SpaceX merger adds another variable for shareholders. Musk said in a SpaceX conference call on Tuesday that both companies had formed special committees of independent directors to examine a possible transaction, while adding that no terms had been agreed and no deal was assured.

Tesla's robotaxi plans also remain under scrutiny after falling short of Musk's earlier ambitions. In Texas, where the company has focused its launch, more than 800 Tesla vehicles are registered for autonomous service, according to FSD Database.

Tesla shares fell 3.2% in after-hours trading after rising 3.6% in the regular session. Merger speculation and SpaceX's earnings helped lift shares in both companies on Wednesday, while Forbes estimated Musk's wealth at $1.013 trillion at 10:30 a.m. New York time.

Source: news article, Euronews with AP, Oct. 22, 2026