Tesla profit falls 43% to $787 million, but cash flow tops forecasts

The surprise was cash. Tesla generated $1.53 billion in free cash flow, the cash left after capital spending, when analysts had expected it to burn about $4.92 billion, Reuters reported. Capital spending was $4.73 billion, more than double the $2.25 billion a year earlier but well below the roughly $7.5 billion analysts expected, Reuters said. Tesla's cash and investments rose $1.9 billion to $45.4 billion, the filing shows. Shares rose about 1.7% in extended trading, after closing up about 3.5% in the regular session.

Cars and energy: Automotive revenue fell 3% to $20.56 billion, and energy storage revenue fell 16% to $2.88 billion even as Tesla deployed 13.7 gigawatt-hours of batteries, up from 12.5 a year ago, the filing shows. Service and other revenue rose 33% to $4.61 billion, CNBC reported. Tesla delivered 486,532 vehicles, down about 2% from a year ago but above the roughly 461,100 analysts expected, Reuters said. Tesla said record sales in Canada, Japan, Taiwan and Australia helped, while it still faces the end of the $7,500 federal EV tax credit and cheaper Chinese rivals abroad, CNBC reported.

Robotaxis and self-driving: Tesla said it began giving Robotaxi rides in Cybercabs in Austin on Sept. 3 and that unsupervised Robotaxi miles grew eightfold from the prior quarter. Active subscriptions to its driver-assist software, FSD (Supervised), which still requires a watching driver, rose 67% to 1.74 million, CNBC reported.

What the beat hides: The headline 'beat' rests on adjusted earnings, which leave out items such as stock-based pay. On standard accounting, profit fell 43% and the operating margin shrank by 3.2 percentage points from a year ago, the filing shows. Free cash flow beat forecasts mainly because Tesla spent about $2.8 billion less than analysts expected, not because the car business grew. Whether that spending was delayed or cut is not explained in the filing.

The merger backdrop: The results came a day after Elon Musk said on SpaceX's earnings call that boards at SpaceX and Tesla have formed special committees to discuss a merger. "Do I think it would be a good idea? Yes," Musk said, according to CNBC. "But at the end of the day, the shareholders have to be supportive of this." He said a Tesla vote would need 50% of all shares, which he called "quite a high hurdle."

What's still unknown: Why capital spending came in so far under forecasts and whether Tesla still expects more than $25 billion for the year; and whether executives address the SpaceX talks on the 5:30 p.m. ET call.

Results figures come from Tesla's third-quarter update filed with the SEC on Oct. 21, 2026. Where news reports differ from the filing (CNBC's capital spending and year-ago profit figures), US Brief uses the filing. Analyst estimates follow LSEG via CNBC and Reuters. After-hours share moves were early and can change. Hero photo shows Gigafactory Texas in 2022 (file photo).