Tesla Profit Drops 43% to $787 Million as Spending on Robots and AI Doubles
Tesla’s third-quarter profit fell to $787 million, down about 43% from $1.37 billion a year earlier, as the company more than doubled its spending on factories, AI computing and robots, according to its quarterly update.
The quarter still beat Wall Street’s forecasts on several measures. Adjusted earnings came to 48 cents a share, compared with 43 cents expected by analysts polled by LSEG, CNBC reported, on revenue of $28.05 billion.
Tesla also generated $1.53 billion in free cash flow. Analysts had braced for a cash burn of about $4.92 billion, according to consensus figures cited by Yahoo Finance.
Shares fell anyway. The stock slid more than 3% in extended trading Wednesday, CNBC said, and was down almost 5% before the bell Thursday, Yahoo Finance reported. Shares were down 14% this year through Wednesday.
Total revenue was roughly flat with last year’s $28.10 billion. Automotive revenue slipped 3% to $20.56 billion, and energy generation and storage revenue fell 16% to $2.88 billion, according to the company’s figures.
Services and other revenue offset part of the decline, climbing 33% to $4.61 billion. Tesla blamed weaker car results on lower average selling prices and tight battery supplies that limited production.
Capital spending reached $4.73 billion in the quarter, up from $2.25 billion a year earlier. Tesla now expects to spend about $20 billion on capital projects this year, down from an earlier forecast of at least $25 billion.
Chief Financial Officer Vaibhav Taneja said on the earnings call that the company plans to fund that spending “primarily from our cash flows from operations.”
Robots, Robotaxis and a Possible SpaceX Deal
Tesla said production of its Optimus humanoid robot has started at its Fremont, California, factory. CEO Elon Musk said reaching an annual rate of 1 million units would probably take “at least a year — maybe a little longer.”
Active subscriptions to Tesla’s Full Self-Driving (Supervised) software rose 67% from a year earlier to 1.74 million, CNBC reported. The company sells the driver-assistance package for $99 a month in the U.S.
“The biggest driver of demand is full self-driving,” Musk said on the call. He said the driverless robotaxi fleet should start to show up in results in 2027, becoming “probably a big deal by Q3 or Q4 of next year.”
Federal regulators have questions. The National Highway Traffic Safety Administration sent Tesla a special order with 21 requests about how it certified the Cybercab, which has no steering wheel or pedals, Yahoo Finance reported. Answers are due Oct. 30.
The results came a day after Musk said on SpaceX’s quarterly call that both companies had formed special committees of independent directors to study a possible merger, while cautioning that a deal should not be assumed.
On Tesla’s call, Musk declined to add to those remarks. “I think I said everything that should be said yesterday,” he said.
Investors are also weighing a long-range forecast from Cathie Wood’s ARK Invest. Its new model puts Tesla’s expected share price at about $4,400 in 2031, with a bull case near $5,000 and a bear case near $3,300.
ARK estimates robotaxis would account for about 80% of Tesla’s enterprise value in 2031, and it calls its forecasts “hypothetical and highly speculative.” Tesla traded around $366 on Tuesday, according to Yahoo Finance.
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