Tesla Beats Q3 Estimates as Services Surge, But Free Cash Flow Plunges
Tesla's Q3 revenue and adjusted EPS exceeded expectations, driven by a 33% rise in services, though free cash flow dropped 62% amid heavy capital spending.
U.S. electric vehicle maker Tesla Inc reported third-quarter revenue of $28.05 billion, slightly ahead of analyst estimates of $27.88 billion and flat year-over-year. Adjusted earnings per share came in at $0.48, beating the consensus of $0.43, though down 4% from the previous year. Despite solid top-line performance, the core automotive business faced headwinds: automotive revenue slipped 3% to $20.56 billion, while energy generation and storage revenue fell 16% to $2.88 billion.
Services and other revenue emerged as the standout performer, rising 33% to $4.61 billion. This growth was partly supported by the launch of Cybercab robotaxi rides in Austin in September and a 67% increase in Full Self-Driving subscriptions to 1.74 million. However, structural shifts in profitability did not mask deteriorating cash flows. Free cash flow totaled just $1.53 billion, a 62% decline, primarily due to high capital expenditures of $4.73 billion during the quarter.
Tesla also disclosed strategic progress in its earnings report: high-volume production lines for the Optimus humanoid robot have started in Fremont, and the Megafactory Texas has begun production with a planned capacity of 50 GWh. The company ended the quarter with $45.4 billion in cash and investments. Shares rose 1.8% in after-market trading. Investors will be watching how softening traditional car sales and heavy capital outlays for AI and robotics expansion impact the company's long-term financial health.