Tesla reported stronger-than-expected third-quarter earnings, driven by robust vehicle demand and operational efficiencies, solidifying its position in the electric vehicle market. The company posted a net income of $787 million for the quarter ending in September, slightly surpassing Wall Street projections of $782.2 million. Total revenue reached $28.04 billion, marginally below analysts’ forecast of $28.06 billion.
Deliveries for the quarter totaled 486,532 vehicles, exceeding the average analyst estimate of 456,896, although this figure reflected a 2 percent decline compared to the same period last year. The majority of deliveries comprised the Model 3 and Model Y, while other models such as the Cybertruck accounted for just 8,295 units, down from 12,364 in the previous quarter. Tesla noted it ended the quarter with its largest backlog for passenger vehicles in four years.
The company’s European sales rebounded significantly after a previous slump influenced by competition from lower-cost Chinese manufacturers and some consumer backlash linked to CEO Elon Musk’s political stances. According to the European Automobile Manufacturers’ Association, registrations in the EU rose by approximately two-thirds in the first eight months of the year compared to 2025. This recovery continued through the third quarter with notable growth in markets like France and Denmark, aided by government incentives and increasing consumer interest.
Beyond automotive manufacturing, Tesla is expanding into artificial intelligence, robotaxis, and humanoid robotics. Capital expenditures totaled $4.73 billion, well below anticipated levels of approximately $7.5 billion. The company also reported free cash flow of $1.53 billion in the third quarter, a sharp contrast to the expected cash burn of $4.92 billion.
Tesla’s shares rose by $6.73, or 1.7 percent, to $393.20 in after-hours trading following the earnings announcement.
In a related development, Musk reiterated his interest in a possible merger between Tesla and SpaceX, the space exploration company he also leads. Both companies have established special committees of independent directors to evaluate the proposal, with Musk abstaining from membership on the committees due to potential conflicts of interest. He emphasized that any merger would require substantial shareholder support. Musk described the idea as potentially beneficial but deferred the decision to the committees.
Tesla and SpaceX maintain interconnected operations and collaborate on various projects, including manufacturing chips through their joint venture Terafab, which aims for volume production by the third quarter of 2028. Tesla has incorporated xAI’s Grok chatbot technology into its vehicles, while xAI has purchased Tesla’s Megapack energy storage systems. SpaceX’s third-quarter revenue significantly exceeded expectations, propelled by substantial earnings from its AI division’s sale of surplus computing capacity to external customers.
Following the news, SpaceX shares increased $11.52, or 7.8 percent, closing at $159.31.