Tesla reported $28.0 billion of revenue for the third quarter, essentially unchanged from the $28.1 billion it booked a year earlier, while net income slipped 4 percent to $1.7 billion. The figures arrived after a Waco, Texas demonstration in which a redesigned Roadster prototype hovered on cold-gas thrusters supplied by SpaceX, a spectacle that did not move the revenue needle.
The tax credit hangover
Automotive revenue fell 3 percent year over year to $20.5 billion, reflecting the first full quarter without the $7,500 federal EV tax credit that expired on September 30, 2025. Deliveries had already signaled the impact: they dropped 2.1 percent versus the blockbuster third quarter of 2025, a decline Musk had warned would make for “a few rough quarters.” Energy generation and storage revenue compounded the weakness, tumbling 16 percent to $2.9 billion. Only services and other revenue, charging, maintenance, parts and insurance, grew, rising 33 percent to $4.6 billion.
Expenses outpace operations
Operating expenses surged 39 percent to $4.8 billion, while income from operations collapsed 56 percent to $718 million. Capital expenditure more than doubled to $4.7 billion as Tesla funnels cash into AI, autonomy and robotics. Musk has guided for at least $25 billion of capex this year, yet the company has deployed only $13 billion through the first three quarters, putting the target at risk. Free cash flow turned positive at $1.5 billion after last year’s negative print, though it still represents a 62 percent year-over-year decline.
Merger talk resurfaces
Speculation around a Tesla-SpaceX combination reignited after Musk disclosed that special committees have been formed to study the idea. He called a merger a “good idea” while insisting he would not participate in the process. The Roadster’s 2028 production promise, now nine years after its original unveiling, remains the more tangible, if distant, catalyst for investors.