Tesla on Wednesday reported a decline in third-quarter profits as near-billionaire Elon Musk’s electric vehicle maker ramped up massive investments in artificial intelligence and other boundary-pushing technologies.
In addition to slightly lower car sales, Tesla saw lower revenue from regulatory credits, energy and storage, while research and development spending more than doubled as the company embarked on a spending spree on AI, robotics and autonomous transportation.
The profits were arguably overshadowed by Musk’s revelation Tuesday that special committees of independent directors from SpaceX and Tesla have been set up to discuss a merger of the two companies. Musk, who runs both companies, declined to provide further details on Wednesday.
The potential merger – which some have dubbed “Elon Inc.” – boosted shares of both companies on Wednesday, bringing Elon Musk’s wealth close to $1 trillion, to $989 billion, according to Forbes’ Real-Time Billionaires Index.
In the third quarter, Tesla reported a profit of $787 million, down 42.7% from the previous year. Revenue was essentially flat at $28 billion.
Analysts were cautious about Tesla’s latest results before their release on Wednesday.
Although third-quarter auto sales beat estimates, partly due to an uptick in European markets amid high gasoline prices, better sales haven’t always translated to Tesla’s bottom line.
The company has faced questions over the rollout of Tesla’s robot taxi project, which has progressed much more slowly than expected.
Musk has repeatedly made overly optimistic predictions about self-driving technology, such as in 2019, when he predicted there would be more than a million robo-taxis the following year.
In Texas, where Tesla has focused its robotaxis launch, there are currently around 800 robotaxis, according to the FSD database.
Tesla’s release highlighted the Sept. 3 launch of robotaxi service in Austin and said “cumulative unsupervised Robotaxi miles increased eight-fold quarter-over-quarter.”
Company officials said Wednesday that if the current pace of growth in robo-taxis continues, the company could be financially significant as early as next year. The ramp-up is driven by a strong desire to avoid security concerns, company officials said.
For much of this year, Tesla has also faced scrutiny over increased capital spending to fund ambitious programs in artificial intelligence, robotics and autonomous driving.
Capital spending more than doubled in the third quarter to $4.7 billion, but the company reduced its capital spending plans compared to the start of the year.
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