Tesla profit falls 43% despite revenue beating analyst estimates and start of Optimus production

Key Facts

Tesla reported a 43% year-on-year decline in net income attributable to common shareholders to $787 million in the third quarter of 2026, alongside higher capital spending. Revenue was $28.05 billion, exceeding the average analyst estimate compiled by London Stock Exchange Group of $27.88 billion, according to Reuters. However, it fell from $28.10 billion in the same period a year earlier. Adjusted diluted earnings per share were $0.48, according to the company's earnings update. That profitability measure fell 4% year on year, a less pronounced decline than the drop in net income attributable to common shareholders.

Revenue fell short of another average analyst estimate compiled by Tesla before the third-quarter earnings release, despite exceeding the average reported by Reuters. The average revenue estimate in the company's compilation was $28,341 million, above actual revenue for the period. Adjusted earnings per share, however, exceeded the average analyst estimate in Tesla's compilation of $0.45 per share. The company reported operating profit of $718 million, according to its quarterly financial update. Operating profit fell 56% year on year, while gross margin under generally accepted accounting principles was 19.6%.

In its automotive business, Tesla delivered 486,532 vehicles in the third quarter, according to its production and deliveries announcement. Deliveries exceeded the average analyst estimate compiled by the company before the announcement of 461,974 vehicles. However, total deliveries declined from the same period a year earlier, according to the company's earnings update. Tesla put the year-on-year decline at 2%, according to the rounded percentage in the update. Production during the quarter totaled 464,391 vehicles, below the number delivered during the same period.

In the energy generation and storage segment, revenue fell 16% year on year to $2,881 million, according to Tesla's financial results. Energy storage deployments totaled 13.7 gigawatt-hours in the third quarter, according to the company's operational announcement. That was below the average analyst estimate in Tesla's compilation of 15.9 gigawatt-hours for the same period. According to Reuters, the company's energy business benefits from demand for grid batteries. That demand comes from renewable energy project developers and data centers, whose need for grid batteries supports Tesla's business in this area.

On liquidity, Tesla generated positive free cash flow of $1,531 million in the third quarter, according to its earnings update. That compared with an average forecast for negative free cash flow of $4,506 million in the analyst compilation published by the company. Despite exceeding those expectations, actual free cash flow fell 62% from the same period a year earlier. Meanwhile, the company's capital expenditures rose 110% year on year to $4,732 million during the quarter. Cash, cash equivalents and short-term investments totaled $45,447 million at the end of the period, according to Tesla's figures.

Elsewhere in the company's business, services and other revenue totaled $4,605 million in the third quarter, according to the earnings update. That revenue grew 33% year on year, while energy generation and storage revenue declined during the same period. Tesla also announced the start of manufacturing of its Optimus robot, saying in the official update: "Optimus production has begun in Fremont." The company scheduled its third-quarter earnings discussion and question-and-answer session for October 21, 2026, according to its announcement to shareholders. The call is scheduled to begin at 5:30 p.m. U.S. Eastern time.