Tesla reported a decline in quarterly profit for the second consecutive period as it increased spending on emerging technologies such as autonomous vehicles and humanoid robots. The company posted a net profit of $787 million for the third quarter, down from $1.4 billion over the same period last year. Revenue held steady at $28 billion, slightly below analysts’ expectations of $28.3 billion.
The earnings announcement followed comments by Tesla’s CEO, Elon Musk, who revealed that Tesla and SpaceX are exploring a potential merger to form a large conglomerate encompassing electric vehicles, robotics, rockets, satellite internet, and artificial intelligence. Musk did not elaborate on the merger during the company’s earnings call on Wednesday.
Tesla has been channeling significant resources into the development of autonomous driving technology and the Optimus humanoid robot, both of which currently generate minimal revenue. The company has also launched the production of the Tesla Semi, an electric heavy-duty truck, and the Cybertruck, a self-driving vehicle notable for its lack of a traditional steering wheel. While production of the Semi has begun in earnest, deliveries remain limited, and the Cybertruck has yet to enter the market.
Musk described the Cybertruck as a potentially dominant mode of passenger transportation in countries allowing its operation, and he highlighted the Optimus robot as a future major product for the company. However, he acknowledged technical challenges, such as creating robot hands with human-like dexterity and sensitivity.
Tesla also introduced a new version of its Roadster sports car, featuring a flying capability for short distances, though production is not expected until 2028. The high price of the Roadster, including the flying edition, is likely to constrain sales volumes. Analysts have expressed skepticism about its impact on Tesla’s broader product lineup.
Despite the push into new technologies, Tesla continues to rely heavily on sales of its Model Y SUV and Model 3 sedan, both mature models, for the majority of its revenue. Enhanced driver-assistance features appear to be contributing to sales growth, particularly in the U.S. and European markets. In the third quarter, Tesla held a 54% share of new electric vehicle sales in the United States, rebounding after a dip below 50% earlier in 2024 amid increased competition from established automakers like Hyundai and General Motors.
Musk’s vision for a combined Tesla-SpaceX entity raises questions about the future emphasis on traditional car sales versus emerging sectors such as AI, robotics, and autonomous ride-hailing services. Meanwhile, major U.S. automakers have adjusted their electric vehicle strategies amid profitability challenges. General Motors, for example, reported a third-quarter profit of $3.3 billion, driven largely by sales of gasoline-powered trucks and SUVs, despite ongoing losses related to electric vehicle investments.
At a New York event on Wednesday, GM executives reaffirmed their commitment to electric vehicles and announced plans to improve competitiveness against Chinese EV makers by developing vehicles with significantly lower-cost battery technology.