Tesla Posts Earnings Gains Amid Cost Surge

Tesla's financial results for the third quarter of 2026 showed a mixed picture of the company's performance. The automaker reported revenue of $28.05 billion, which was flat compared to the same quarter last year. Earnings per share were reported at $0.48, beating analyst expectations but falling short of the $0.50 figure from a year prior.

One key point from the report is an improvement in profitability margins. The company's total gross margin increased to 19.6%, up from 16.8% in the second quarter. Automotive gross margin, excluding regulatory credits, also saw a rise to 18.1%. This recovery in margin was noted as a positive development following a period of decline.

However, a second point is that profits are still declining overall. Operating income fell 56% to $718 million as the company's spending on artificial intelligence and its Optimus robot program grew faster than gross profit. Consequently, net income under GAAP accounting standards dropped 43% to $787 million.

A third key point concerns the company's capital expenditure. Spending in this area reached $4.73 billion for the quarter, more than double the amount from a year ago. For the first nine months of the year, capital spending totaled $13.01 billion. The company has previously guided for more than $25 billion in capital spending for the full year 2026.

In other areas of the business, revenue from services and other grew by 33%. The company also reported that its active FSD subscriptions increased by 67% to reach 1.74 million. Regarding vehicle production, Tesla stated that battery availability was the limiting factor in increasing volumes for the quarter.

Looking ahead, the company's ability to manage its spending will be a key factor. The current level of capital expenditure suggests a significant increase will be needed in the fourth quarter to meet the annual guidance. Management was scheduled to discuss these financial results during an earnings call on the evening of the report's release.