Key Takeaways
- Revenue was $28.05 billion, flat from last year. Trailing twelve-month revenue stayed above $100 billion for the second quarter in a row.
- GAAP operating income was $718 million, up from $398 million last quarter but down 56% from last year.
- GAAP net income was $787 million. Non-GAAP net income was $1.7 billion.
- Free cash flow was $1.5 billion, and cash and investments increased by $1.9 billion to $45.4 billion.
- FSD (Supervised) now has 1.74 million active subscriptions, up 67% from last year. It reached over 75% of new North American deliveries.
- Tesla began Robotaxi rides with Cybercabs in Austin on September 3.
Tesla’s Q3 2026 Financial Snapshot
Tesla earned more profit compared to the last quarter, even though sales did not grow. Gross margin improved to 19.6%, up 160 basis points from a year ago. But operating costs rose 39% to $4.78 billion, which pulled operating income below last year’s level.
| Metric ($ millions) | Q3-2025 | Q2-2026 | Q3-2026 | Change vs. last year |
| Total revenue | 28,095 | 28,236 | 28,046 | 0% |
| Gross profit | 5,054 | 4,751 | 5,494 | +9% |
| Gross margin | 18.0% | 16.8% | 19.6% | +160 bp |
| Operating expenses | 3,430 | 4,353 | 4,776 | +39% |
| Operating income | 1,624 | 398 | 718 | -56% |
| Net income (GAAP) | 1,373 | 1,114 | 787 | -43% |
| Net income (non-GAAP) | 1,770 | 1,153 | 1,697 | -4% |
| EPS, diluted (GAAP) | $0.39 | $0.32 | $0.22 | -44% |
| EPS, diluted (non-GAAP) | $0.50 | $0.33 | $0.48 | -4% |
| Adjusted EBITDA | 4,227 | 3,273 | 3,900 | -8% |
Revenue by Business
Services and other revenue grew fastest. Energy revenue fell, and automotive revenue slipped slightly.
| Segment ($ millions) | Q3-2025 | Q3-2026 | Change |
| Automotive | 21,205 | 20,560 | -3% |
| Energy generation and storage | 3,415 | 2,881 | -16% |
| Services and other | 3,475 | 4,605 | +33% |
Cash Flow: Strong Operations, Heavy Spending
Tesla generated $6.3 billion in operating cash flow. It also spent $4.7 billion on capital expenditures, more than double last year’s $2.2 billion. That left $1.5 billion in free cash flow, which is down 62% from last year but a clear recovery from last quarter’s negative $1.1 billion.
Tesla says it will keep a strong balance sheet. It wants enough cash to fund its product plans, long-term capacity growth and further vertical integration.
Vehicle Production and Deliveries
Tesla built more cars than it sold. It produced 464,391 vehicles, up 4%, and delivered 486,532, down 2%. Model 3 and Model Y made up almost all of the volume. Other models, such as the Cybertruck, fell sharply.
| Metric | Q3-2025 | Q3-2026 | Change |
| Model 3/Y production | 435,826 | 457,387 | +5% |
| Other models production | 11,624 | 7,004 | -40% |
| Total production | 447,450 | 464,391 | +4% |
| Model 3/Y deliveries | 481,166 | 478,237 | -1% |
| Other model deliveries | 15,933 | 8,295 | -48% |
| Total deliveries | 497,099 | 486,532 | -2% |
Tesla delivered its 10 millionth vehicle this quarter. It also set delivery records in Canada, Australia, Japan and Taiwan, and Gigafactory Berlin hit record production.
Tesla ended the quarter with its largest passenger-vehicle order backlog in four years. Battery supply, not demand, is the main limit on how many cars it can build. The company is working to secure more battery supply so its factories can run at full capacity.
FSD (Supervised): Adoption Keeps Climbing
Tesla’s Full Self-Driving (Supervised) software needs a driver who pays attention at all times. It does not make the car autonomous. Even so, more people are signing up.
- Active subscriptions reached 1.74 million, up from 1.04 million a year ago.
- More than 75% of new North American deliveries included FSD. That is nearly 20 percentage points higher than last quarter.
- Four more European countries approved FSD: Croatia, Slovenia, the Czech Republic and Slovakia. FSD is now available in nine EU countries.
- More than 100,000 European customers have driven over 160 million kilometers with it.
Tesla believes FSD is boosting car demand wherever it is available. It is working with regulators to get approval in other markets.
Robotaxi and Cybercab
Tesla started giving Robotaxi rides in Cybercabs in Austin on September 3. By the end of the quarter, the Robotaxi service had logged nearly two million cumulative unsupervised miles. That is eight times the previous quarter’s total, driven by steady double-digit weekly growth.
The service now runs from 6 AM to midnight. Tesla wants to cut wait times by adding more vehicles and improving its dispatch software. Riders can also use Grok inside the Cybercab, using voice commands to manage email, calendars, files, chats, and tasks.
New Products: Semi, Optimus and Roadster
- Tesla Semi: Volume production has started at the Nevada factory. The top version can travel 500 miles at a full 82,000 lb combined weight. It uses 1.7 kWh per mile, about a third of the energy a comparable diesel truck needs.
- Optimus: Production started on high-volume lines in Fremont. Tesla says these are its first production-quality robots and that the process is ready for a commercial product.
- Roadster: Tesla unveiled the Next Gen Roadster on October 15. It is still in design development.
Tesla Q3 2026 Earnings: Revenue Holds Steady
Revenue: Flat at $28.0 Billion
Total revenue held roughly steady compared with last year.
| Factor | Effect on Revenue |
| Energy Generation and Storage | Down, partly due to tariff-related customer refunds |
| Vehicle average selling price (excl. FX, including mix) | Down |
| Regulatory credit revenue | Down |
| Vehicle deliveries | Down |
| Services and Other | Up |
| Foreign exchange | Up, adding $0.3B |
| Automotive ancillary sales | Up, mainly from more FSD subscriptions |
Profitability: Operating Income Fell 56%
Operating income dropped 56% from last year to $0.7B. That leaves an operating margin of 2.6%.
| Factor | Effect on Operating Income |
| Operating expenses | Up, driven by SI and other R&D projects, stock-based compensation (including the 2025 CEO Performance Award) and SG&A |
| Regulatory credit revenue | Down |
| Energy Generation and Storage gross profit | Down |
| Vehicle ASP (excl. FX) | Down, but partly offset by better regional and product mix |
| Services and Other gross profit | Up |
| Restructuring and other expenses | Lower |
| Automotive ancillary sales | Up, mainly from more FSD subscriptions |
| Foreign exchange | Up, adding $0.1B |
Cash Position
- Cash, cash equivalents and short-term investments ended the quarter at $45.4 billion.
- That is $1.9 billion higher than the previous quarter.
- Most of the increase came from $1.5 billion in positive free cash flow.
Tesla’s Outlook
Tesla’s plans for the coming quarters are clear:
- Volume: Run factories at maximum capacity. Deliveries will depend on demand, supply chain readiness, and how Tesla splits vehicles between customer sales and its own fleet.
- Profit: Keep cutting manufacturing and operating costs. Over time, Tesla expects software, SI, and fleet-based profits to grow alongside hardware profits.
- Products: Grow sales with an efficient lineup and use existing factories fully before building new ones.
- Investment: Continue multi-year projects in SI compute, solar, battery materials, and semiconductor manufacturing.
Source:
https://assets-ir.tesla.com/tesla-contents/IR/TSLA-Q3-2026-Update.pdf