Tesla third-quarter profit falls as it weighs possible merger with SpaceX
In short
Tesla reported third-quarter net income of $787 million, down 44% from a year earlier, on revenue of about $28 billion that was basically flat. Elon Musk said on a SpaceX call that special committees at each company are discussing a possible combination, while cautioning that many hurdles remain.
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Tesla reported a decline in profit for the third quarter as it prepares for a possible merger with Elon Musk's other big business, SpaceX, the Seattle Times reported. Net income was $787 million, or 22 cents per share, down 44% from the year-earlier period. Ars Technica's headline put the drop at 43%. Excluding certain items, earnings per share of 48 cents beat Wall Street analyst expectations by 3 cents. Revenue was basically flat at $28 billion, falling slightly short of analysts' forecast. [ 2 , 3 ]
In a SpaceX conference call on Tuesday, Musk said a long-rumored merger with Tesla might be in the works. He said special committees had been set up at each company to discuss a possible combination, while cautioning that many hurdles remain. The New York Times described Tesla as controlled by Musk and said it is considering merging with SpaceX. [ 1 , 2 ]
Free cash flow was $1.5 billion, a surprise to analysts who had expected the company to burn through cash. Tesla made 18.1 cents for every dollar of car sales in the three months through September, up almost 3 cents from a year earlier, so margins held up despite concerns that discounts to boost sales had squeezed profitability. Capital spending doubled in the quarter to $4.7 billion, a major concern for tech investors who are questioning future payoffs from artificial intelligence and how the investments will be financed. [ 2 ]
The New York Times said Tesla spent heavily on artificial intelligence and other new technologies and remains dependent on the Model Y sport utility vehicle and Model 3 sedan for much of its revenue. Tesla had previously reported selling nearly 490,000 vehicles last quarter, a rise from the prior three months, which followed a drop stretching more than a year amid backlash over Musk's support for President Donald Trump and right-wing politicians in Europe. Tesla stock fell 2% in after-hours trading after climbing 3.6% in the regular session. Ars Technica said Tesla's energy storage business also shrank in the third quarter of 2026. [ 1 , 2 , 3 ]
Why it matters
The results show higher spending on artificial intelligence and other new technologies weighing on Tesla's profit, while the company still depends on the Model Y and Model 3 for much of its revenue. A possible merger with SpaceX adds uncertainty, since Musk said many hurdles remain.
Key facts
- Tesla reported third-quarter net income of $787 million, or 22 cents per share, down 44% from the year-earlier period, according to the Seattle Times. [ 2 ]
- Excluding certain items, earnings per share were 48 cents, 3 cents above Wall Street analyst expectations. [ 2 ]
- Revenue was basically flat at $28 billion, slightly below analysts' forecast. [ 2 ]
- Free cash flow was $1.5 billion, which surprised analysts who had expected the company to burn through cash. [ 2 ]
- Capital spending doubled in the third quarter to $4.7 billion. [ 2 ]
- Musk said special committees had been set up at Tesla and SpaceX to discuss a possible combination. [ 2 ]
- Ars Technica said Tesla's energy storage business also shrank in the third quarter of 2026. [ 3 ]
Confirmed by several sources
Still unclear
- The size of the profit decline. The Seattle Times put the fall in net income at 44%, while Ars Technica's headline said 43%.
- Whether a Tesla-SpaceX merger will happen. Musk said special committees were set up to discuss a possible combination and cautioned that many hurdles remain; no deal has been announced in the documents.
What local media are saying
Timeline, local time
- The New York Times published its report on Tesla's earnings and the merger talks. [ 1 ]
- The Seattle Times published a report saying Tesla's third-quarter profit fell and that its stock was down 2% in after-hours trading. [ 2 ]
- Ars Technica published its report on the 43% profit drop and the shrinking energy storage business. [ 3 ]