Tesla Earnings Are Almost Here. Pay Attention to Profit Margins and AI Ambitions.
Tesla will report third-quarter earnings after Wednesday’s market close. Analysts and investors will be listening closely to every comment CEO Elon Musk makes during a conference call discussing the results.
What to focus on isn’t always easy to answer–but there are a few things that should be a higher priority.
Headline numbers are always a good place to start. Wall Street is looking for earnings per share of 56 cents from sales of $27.3 billion, according to FactSet. Tesla needs to beat both figures.
The company announced on Oct. 2 that it had delivered a record 497,099 cars in the third quarter, about 54,000 vehicles more than analysts projected. That number of cars is worth roughly $2.4 billion in sales.
Wall Street’s estimate for total automotive sales, however, is about $20.6 billion, rising just $600 million since the delivery report. Wall Street estimates haven’t adjusted for the better-than-expected delivery results. Analysts don’t always update estimates right away, which can set up a “beat.”
Investors should also pay attention to automotive gross profit margins, excluding the impact of regulatory credit sales. Wall Street projects 15.5% for the third quarter, after Tesla reported automotive gross profit margins excluding credit sales of 15% in the second quarter. Automotive profit margins net of credits peaked at 30% in the first quarter of 2022.
Investors should also look for commentary on margins from management. The U.S. EV industry just lost the $7,500 federal purchase tax credit, making EVs more expensive. Exactly what that will do for demand and profitability is hard to say.
Earlier this month, Tesla launched lower-priced “standard” versions of its Model Y and 3 vehicles, partly to combat the loss of the credit. Investors will want to know how orders for those two models are shaping up.
Investors will also be paying close attention to comments related to artificial intelligence. Tesla uses AI to train automobiles to drive themselves and train humanoid robots to do useful tasks.
Tesla launched a self-driving taxi service in Austin, Texas, in July–and while the company has expanded the Austin area served by the so-called “robotaxis,” it hasn’t added any new cities. How fast Tesla can safely expand robotaxis remains a top concern for investors.
Any update from Tesla management about robots, in particular, will also be appreciated: Significant sales are expected in 2026. Exactly when and how many is hard to say.
Tesla delivering good news on all five items would likely send shares higher after earnings. Exactly what Tesla management needs to say and what shares would do is, of course, impossible to predict with certainty.
Coming into Wednesday trading, shares have gained 95% over the past six months. Earnings estimates for 2026 have fallen roughly 33% over that same span.