Tesla's profit drops as it explores a possible merger with Musk's other public company, SpaceX
Tesla reported a decline in third-quarter profit, but generated more cash than analysts expected, leaving investors with a mixed picture as it explores a possible merger with Elon Musk's other big company, SpaceX.
Tesla's third-quarter profits fell as the company increased spending on artificial intelligence, robotics, and autonomous transport. The electric vehicle maker reported a net income of $787 million, a 43% decrease from the previous year. Revenue remained essentially flat at $28 billion, slightly below analysts' average forecast of $28.3 billion.
Excluding certain items, earnings per share of 48 cents exceeded expectations by 3 cents. Notably, Tesla generated $1.5 billion in free cash flow, a significant improvement from the previous year. The company reduced its capital spending forecast for 2026 to approximately $20 billion, down from over $25 billion earlier. Tesla's automotive gross margin improved to 18.1%, up from 15.4% a year earlier.
Despite delivering 486,532 vehicles, net profit remained unchanged. Tesla's robotaxi business and investments in SpaceX's projects have raised questions about the company's future. Musk hinted at a potential merger with SpaceX, though no terms have been agreed upon.
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