Tesla Generates $1.531 Billion in Free Cash Flow in the Third Quarter
Key Facts
Tesla generated $1.531 billion in free cash flow in the third quarter of 2026, after recording negative free cash flow of $1.092 billion in the previous quarter, according to the company’s update filed with the U.S. Securities and Exchange Commission. The figure also compares with free cash flow of $3.990 billion in the third quarter of 2025. The result came as analysts had expected the company to report a cash burn rather than cash generation, according to the Associated Press. The outcome marks a clear quarter-on-quarter improvement, but was below the level recorded a year earlier. It coincided with lower profits and higher spending on artificial intelligence projects and industrial expansion.
Capital expenditures totaled $4.732 billion in the quarter, down from $5.789 billion in the second quarter but up from $2.248 billion in the same period last year, according to Tesla’s update. This trend shows spending fell from the previous quarter while remaining above the year-earlier level. In its filing, the company said it expects capital expenditures to exceed $20 billion during 2026. Tesla linked the plan to supercomputing initiatives and data centers, as well as manufacturing expansion and research and development. The company had lowered its previous spending forecast, while its latest official filing puts the expected level at more than $20 billion.
Days payable outstanding rose to 66 days at the end of September, from 58 days at the end of June, according to Tesla data. That means the interval between recording obligations and paying them lengthened from the previous quarter. This development is among the factors to consider when assessing quarterly free cash flow, alongside changes in capital spending. In September, the company entered into three credit agreements with total commitments of $30 billion to provide financing flexibility for planned investments, according to its filing. Cash, cash equivalents and short-term investments totaled $45.447 billion as of September 30.
For the nine months ended in September, net cash provided by operating activities was $14.897 billion, compared with $10.934 billion in the same period of 2025, according to Tesla’s filing. This improvement puts the quarter’s free cash flow in the context of a broader period in which operating cash rose year over year. But liquidity performance diverged from earnings: net income attributable to common stockholders fell 44% to $787 million, or 22 cents per share, according to the Associated Press. Operating expenses rose to $4.776 billion from $3.430 billion a year earlier. Meanwhile, operating income fell to $718 million, from $1.624 billion in the third quarter of 2025.
Revenue was $28.046 billion in the third quarter, compared with $28.095 billion a year earlier, and Tesla said quarterly revenue was roughly flat year over year. Energy generation and storage revenue fell to $2.881 billion from $3.415 billion, while services and other revenue rose to $4.605 billion from $3.475 billion. The company said the decline in energy and storage revenue was partly related to refunds connected to tariffs, and also cited lower average vehicle selling prices, regulatory credit revenue and deliveries. Those declines were offset by growth in services, additional vehicle sales and a positive foreign-exchange impact of $0.3 billion. Tesla also said higher operating expenses, driven by superintelligence projects, research and development, and stock-based compensation, weighed on operating income.
Tesla delivered 486,532 vehicles and produced 464,391 in the quarter, with deliveries down 2% from a year earlier, according to the company’s update. Deliveries exceeded production by more than 22,000 vehicles for a second consecutive quarter, drawing down inventory, according to Reuters. In energy storage, the company said demand remained strong and it recorded its highest backlog of orders to that quarter. The Texas Megafactory began production with planned capacity of 50 gigawatt-hours. Tesla also said 75% of vehicles sold in North America included a subscription to its paid driver-assistance service, according to the Associated Press.
In autonomous-driving activities, Tesla said it began offering Cybercab robotaxi rides in Austin on September 3, and that the service’s cumulative driverless miles approached 2 million by quarter-end. The company is targeting 400 megawatts of computing capacity for training its superintelligence by the end of 2026. These plans are part of expected spending exceeding $20 billion during the year, according to its filing. The stock moved in both directions on earnings day, rising 3.6% during the regular session on October 21 before falling 3.2% in after-hours trading, according to the Associated Press. The stock closed at $372.22 on October 23, according to EL7 data.