EL7.AI
StocksMedium•21 October 2026•
2 min read

Tesla profit falls 43% as adjusted margin improves to 13.9% from previous quarter

Key Facts

1Net income attributable to common shareholders fell 43% to $787 million.
2The adjusted earnings before interest, taxes, depreciation and amortization margin was 13.9%, compared with 11.6% in the previous quarter and 15.0% a year earlier.
3Tesla reported free cash flow of $1,531 million, down 62% year on year.
4Capital expenditure rose 110% year on year to $4,732 million.

Tesla reported an adjusted earnings before interest, taxes, depreciation and amortization margin of 13.9% in the third quarter of 2026, compared with 11.6% in the previous quarter and 15.0% a year earlier, according to the company's earnings presentation. Adjusted EBITDA totaled $3,900 million, down 8% year on year. Revenue was $28,046 million, with a rounded year-on-year change of 0%. Revenue fell short of the average analyst estimate of $28,341 million, according to consensus compiled by Tesla and published on October 19. Adjusted diluted earnings per share, meanwhile, came in at $0.48, despite declining 4% from the same period last year. That exceeded the average analyst estimate of $0.45 per share in the company's consensus.

On operating results, Tesla reported a 56% year-on-year decline in operating profit to $718 million. Its operating margin improved to 2.6% from 1.4% in the previous quarter, but remained below the 5.8% recorded a year earlier. Net income attributable to common shareholders under generally accepted accounting principles fell 43% to $787 million. Operating expenses rose 39% year on year to $4,776 million, according to the earnings presentation. Revenue from services and other activities, meanwhile, increased 33% to $4,605 million.

Tesla reported positive free cash flow of $1,531 million, despite a 62% decline from the same period last year. The analyst consensus compiled by the company had forecast negative free cash flow of $4,506 million. Actual capital expenditure totaled $4,732 million, up 110% year on year, according to Tesla's disclosure. However, it was below the average analyst estimate of $7,771 million. In the context of financing the company's expansion, Reuters reported in September that Tesla had entered into credit agreements totaling $30 billion.

In energy generation and storage, revenue fell 16% year on year to $2,881 million from $3,415 million a year earlier, according to Tesla. The company deployed 13.7 gigawatt-hours of energy storage products during the quarter. Active Full Self-Driving subscriptions reached 1.74 million, compared with 1.48 million in the previous quarter, representing year-on-year growth of 67%. In its automotive business, Tesla reported production of 464,391 vehicles during the third quarter. Deliveries during the period totaled 486,532 vehicles. The company said "battery availability remains a constraint" on the pace of its global vehicle production ramp-up. Tesla scheduled its discussion of results and outlook for the evening of October 21, 2026, at 5:30 p.m. U.S. Eastern time.