Tesla reports Q3 earnings beat, free cash flow and capex better than expected

Tesla (TSLA) reported third quarter earnings that were better than expected, with its free cash flow and capex spending coming in ahead of Wall Street estimates.

Tesla reported Q3 revenue of $28.05 billion vs. the Bloomberg consensus of $28.13 billion. Tesla posted adjusted EPS of $0.48 vs. the $0.44 estimate, with adjusted EBITDA of $3.90 billion vs. $3.66 billion.

Tesla stock rose in after hours trading.

Tesla reported free cash flow (FCF) of $1.53 billion vs. an estimated -$4.92 billion, with capital expenditures climbing to $4.732 billion vs. $7.96 billion for the quarter.

Tesla revealed its Optimus robot entered started production at its Fremont factory. “While we will continue to iterate on the hardware and manufacturing process, we have proven that the current manufacturing process for Optimus is suitable for a commercial product,” the company said in its earnings release.

In terms of its other AI efforts, Tesla said it plans to reach 400 MW of SI (AI) training compute by the end of the year. Tesla said its active FSD (full-self driving) subscriptions climbed to 1.74 million.

Tesla has guided to more than $25 billion in capital expenditures for 2026, versus roughly $8.5 billion spent last year. The money is going to Optimus production lines, AI compute, the Cybercab ramp, and the Terafab chip plant Tesla is building with SpaceX.

CEO Elon Musk also has stirred the pot recently with comments about a possible tie-up with SpaceX, his other company.

“I think both SpaceX and Tesla have formed special committees to discuss this idea,” Musk said during SpaceX’s earnings call Tuesday night. “At the request of shareholders, and these special committees are consist of independent directors. And because I’m a conflicted party, I can’t actually be in the discussions of the special committees.”

He added: “I don’t think we should necessarily assume that I think some people out there assume that a SpaceX and Tesla merger is a certainty. And I think that would be overstating it. Do I think it would be a good idea? Yes.“

Teslareported Q3 deliveries of 486,532, down 2% from a year ago but well ahead of the Bloomberg consensus of 463,000. Energy storage deployments came in at 13.7 GWh, up from 12.5 GWh a year ago and Q2’s 13.5 GWh.

Tesla’s sales in its key territories are moving in different directions. The US is still feeling the loss of the $7,500 federal EV tax credit, which set off a buying rush in last year’s third quarter before it expired.Cox Automotive estimates Tesla sold around 144.1K EVs in the US in Q3, down nearly 20% year over year. That was still about 54% of the US EV market, more than all other brands combined.

Tesla’s Shanghai business, however, posted a September wholesale volume of 95,366 vehicles, its best month of 2026, with exports up 58%, while domestic sales fell 9%. In Europe, Tesla registrations across the EU, UK, and EFTA rose 43.3% from January through August, per ACEA.

Tesla began commercial Cybercab service in Austin on Sept. 3, but federal regulators have questions. The National Highway Traffic Safety Administration (NHTSA) issued Tesla a special order with 21 requests on how it self-certified the Cybercab, which has no steering wheel or pedals, as compliant with federal safety standards. Tesla asked for an extension to Nov. 20. NHTSA granted 30 days instead, making answers due Oct. 30.

Tesla also finally revealed its long-delayed Roadster last Thursday at SpaceX’s (SPCX) facility in Waco, Texas. The car used cold-gas thrusters to jump over several Teslas, including a Semi. Tesla said the Roadster hit 0-60 mph in 0.81 seconds in a test at the event, and Musk said production starts in 2028.

Deepwater’s Gene Munster called it an “engineering flex” with little commercial value, and Morningstar expects the Roadster to sell fewer than 2,000 units a year.

Pras Subramanian is Lead Auto Reporter for Yahoo Finance. You can follow him on X and on Instagram.

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