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Stock fell more than 3% after hours as free cash flow dropped 62% and capex more than doubled year over year.
Tesla Q3 earnings beat LSEG estimates on revenue and EPS, but the stock fell more than 3% in extended trading after the company reported a slight year-over-year decline in total revenue, according to the report.
Adjusted earnings per share were 48 cents versus 43 cents expected, and revenue was $28.05 billion against a $27.9 billion estimate. The earnings deck showed $28.24 billion of sales a year earlier; $28.05 billion against $28.24 billion is a decline of roughly 0.7%.
Segment results were uneven. Automotive revenue fell 3% year over year to $20.56 billion, energy revenue declined 16% to $2.88 billion, and services and other revenue rose 33% to $4.61 billion, the report said. Automotive’s $20.56 billion was about 73% of total quarterly revenue (20.56 over 28.05).
Profit squeezed as AI spending rises
Tesla said lower average selling prices and trouble securing battery supplies weighed on automotive revenue and profits. Net income attributable to common shareholders fell 29% to $787 million, or 22 cents a share, from $1.11 billion, or 32 cents, a year earlier. The report said the drop in profitability reflects a surge in spending on Optimus humanoid robots and other AI initiatives. Capital expenditures more than doubled year over year to $3.73 billion, and free cash flow plunged 62% to $1.53 billion after turning negative in the second quarter.
Software and autonomy metrics
Tesla said uptake of its FSD (Supervised), which it sells for $99 per month in the U.S., grew by 20 percentage points from the second quarter, and active FSD subscriptions increased 67% year over year to 1.74 million. “We believe that FSD is driving demand in markets where it is available, and we continue to work with regulators to get it approved in other markets,” the investor deck said. Ashok Elluswamy said on the call that some customer cars should get access to forthcoming FSD (Unsupervised) systems around the second quarter of next year.
Tesla is testing its bronze two-seater Cybercab for robotaxi use. Elon Musk said “the vast majority of the Cybercab stuff will be essentially Tesla-owned and transport-as-a-service.” The company plans to bring Cybercab to cities beyond Austin, Texas, this year, Taneja said, and Musk said the driverless robotaxi fleet should start contributing to financials in 2027. The fleet now includes 362 Model Y Robotaxi and 449 Cybercab vehicles authorized for driverless operations in Texas, according to the Texas Department of Motor Vehicles.
Musk addressed merger speculation after saying on SpaceX’s quarterly call that it would be a “good idea” to merge the two companies and that both boards had formed special committees to discuss a possible tie-up. On the Tesla call he added, “I think I said everything that should be said yesterday.”
The report said Tesla delivered 486,532 vehicles in the quarter, about 2% below the year-ago number. Tesla said auto sales in Canada, Japan, Taiwan and Australia hit records in the quarter. The report said growth has been meager in Tesla’s core market as Chinese EV makers such as BYD and Xiaomi gained popularity in Asia and Europe, and the company was hit last year by the end of a federal EV tax credit. The report also noted Tesla shares are down 14% this year.
Dates to watch include the planned FSD (Unsupervised) customer access around the second quarter of next year and the expansion of Cybercab operations beyond Austin this year.
Source: CNBC.
This article was written with AI assistance and reviewed by an editor.
This content is for informational purposes only and does not constitute financial advice.
🧠 HafidWatch Take
While Tesla’s driverless fleet in Texas is steadily growing, the critical factor for the robotaxi business to impact financials by 2027 will be how effectively these vehicles are utilized. Authorization numbers alone don’t reveal actual deployment or revenue generation, so the timing of customer access to unsupervised FSD and the expansion of Cybercab services will play a pivotal role in turning this growing fleet into a sustainable profit center. Monitoring how quickly Tesla converts authorizations into active, revenue-driving operations will be key to assessing the true progress of its robotaxi ambitions.
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