As the smoke clears from its scandalous Roadster demo, Tesla reported its third-quarter results on Wednesday – and the cold reality is that revenue has stagnated.
Tesla said it had net income of $1.7 billion on revenue of $28.0 billion in the quarter ended September 2026. Revenue was flat, while profits fell 4% from the third quarter of 2025, when the company had net income of $1.4 billion on revenue of $28.1 billion. Tesla’s revenue exceeded Wall Street expectations of $27.9 billion, according to data compiled by LSEG. Tesla’s forecast calls for third-quarter revenue of $28.3 billion.
These results follow a disappointing third quarter sales report, in which Tesla reported a 2.1% decline in customer deliveries compared to the blockbuster third quarter of 2025. it will experience “a rough few quarters” due to expiration of incentives and other macroeconomic factors.
Tesla reported auto revenue of $20.5 billion, a 3% year-over-year decline, a sign that the company’s auto business is struggling after the tax credit was eliminated. But there were also worrying signs for Tesla’s other businesses; the company reported $2.9 billion in energy generation and storage revenue, a staggering 16% year-over-year decline. “Services and other revenue,” such as the money the company makes from electric vehicle charging, maintenance, parts and insurance, rose 33% to $4.6 billion — a rare bright spot in an otherwise bleak earnings report.
Tesla’s capital spending — also known as capex — soared 110% year over year to $4.7 billion this quarter, as the company continues to pour money into AI, autonomous vehicles and robotics. Musk said he expects “a massive investment year” of at least $25 billion in capital spending as Tesla continues to transform into an AI and robotics company. But the company only spent $13 billion in the first three quarters of the year, suggesting Tesla may fall short of that $25 billion goal.
Operating expenses – the daily costs of running Tesla’s business – increased 39% year over year to $4.8 billion, while its operating revenue – the profit Tesla generates from these daily transactions – declined 56% year over year to just $718 million.
On the positive side, Tesla reported free cash flow of $1.5 billion, after dipping into negative territory last year. Still, that figure represents a 62% year-over-year decline, a sign that Tesla’s operating revenues were still struggling to cover its capital expenditures.
The possibility of a Tesla-SpaceX merger gained new momentum after Musk’s revelation this week that the two companies had formed special committees to discuss the possibility. Musk said a merger would be a “good idea,” although he said he would not be involved in the process.
Beyond the merger negotiations, last quarter also saw the highly anticipated reveal of the next-generation Tesla Roadster, nine years after its initial announcement. The demonstration in Waco, Texas, featured a redesigned two-seater prototype flying and flipping in the air using cold gas thrusters supplied by SpaceX. While the event generated its own cottage industry of online reactions, it failed to quell skeptics that the vehicle would go into production in 2028, as promised.
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