ii view: Tesla earnings beat forecasts but shares weaker

Tesla and SpaceX CEO Elon Musk at an event in Washington DC earlier this month. Photo: Win McNamee/Getty Images.

Third-quarter results to 30 September

• Total revenue flat at $28 billion
• Auto revenue down 3% to $20.5 billion
• Energy generation and storage revenue down 16% to $2.9 billion
• Services and other revenue up 33% to $4.6 billion
• Adjusted earnings down 4% to $0.48 per share
• Capital expenditure up 110% to $4.73 billion

ii round-up:

Tesla Inc (NASDAQ:TSLA) reported third-quarter earnings that exceeded Wall Street forecasts, with the results set against a backdrop of a possible merger with fellow Elon Musk company Space Exploration Technologies Corp Class A (NASDAQ:SPCX).

Auto sales down 3% to $20.5 billion offset a one-third gain in Service, or charging and supervised self-driving fees, to $4.6 billion, leaving total sales flat at $28 billion.

A more than doubling in capital expenditure year-over-year to $4.73 billion helped drop adjusted earnings by 4% to $0.48 per share. Analysts had forecast $0.43 a share.

Shares in the Nasdaq 100 company fell 3% in post results trading having come into these latest numbers down around 15% so far in 2026. Mercedes-Benz Group AG (XETRA:MBG) is down around a third during that time. SpaceX shares sit just ahead of their IPO price of $135 per share. The Nasdaq 100 index is up by almost 15% year-to-date.

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Like SpaceX, Tesla is focused on physical or moving AI products such as electric vehicles, self-driving robotaxis, a self-driving lorry cab known as the Tesla Semi, as well as a humanoid style robot called Optimus.

Current Tesla capital expenditure includes the building of a factory in Texas to make computer chips needed for products. The facility is being built in partnership with SpaceX and Intel Corp (NASDAQ:INTC). 

Fees for Tesla’s partially automated driving system in the US at $99 per month rose 20% from the second quarter. Active subscriptions rose two-thirds from a year earlier to 1.74 million.

A rollout of Robotaxis beyond their current testing in Austin Texas is expected to see a driverless fleet begin to contribute towards Tesla sales in 2027. 

Tesla Q3 deliveries, the nearest number it gives to sales, and including its popular Model 3 car, rose to 486,532 vehicles from the prior quarter’s 480,126, likely aided by rising pump prices. 

Energy storage system deployments of 13.7 GigaWatt Hours (GWh) for Q3 rose from 12.5 GWh a year ago, although with price competition likely pushing revenues for the division down 16% to $2.9 billion.

Broker Morgan Stanley reiterated its ‘equal weight’ stance on the shares post the results, raising its price target to $410 per share from $400.

ii view:

Started in 2003 by Martin Eberhard and Marc Tarpenning, Tesla is today valued at close to $1.5 trillion. Geographically, the US dominated in 2025 with 50% of all revenues, followed by China at 22% and other markets, including the UK and Europe, the balance of 28%.

For investors, regulatory hurdles regarding self-driving cars have yet to be navigated in many countries globally. Tesla must now generate returns on annual 2026 capital expenditure of $25 billion via products including robotaxis and robots. Competition in the autonomous vehicles sector from rivals like Google owner Alphabet Inc Class A (NASDAQ:GOOGL)'s Waymo is not the be ignored, while Tesla’s core EV product continues to battle rival carmakers.

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More favourably, Tesla summarises its ambition as revolutionizing transportation, energy and productivity, with a potential merger of Tesla with SpaceX bringing two pools of AI products together, underlining a push towards physical AI domination. Quarterly revenues away from selling cars of 27% is up from 14% in early 2023. A diversity of factories geographically and innovation in manufacturing techniques are aimed at reducing costs, while concerns about climate change have not gone away, with millions of fossil fuel vehicles yet to be replaced.

For now, huge investment in areas such as robotaxis and robots, which are yet to be proved, offer room for caution. That said, Tesla’s position as a key play in physical AI will likely keep investors interested in this historically innovative business.

Positives:

• Climate change concerns persist
• Expanding network of superfast charging stations

Negatives:

• Rising competition from other manufacturers
• Potential regulatory hurdles for self-driving vehicles

The average rating of stock market analysts:

Strong hold