Tesla reported better-than-expected adjusted earnings for the third quarter on Wednesday.
A rebound in vehicle deliveries and growth in energy storage supported sales, while spending on artificial intelligence, robotics and autonomous driving remained a focus for investors.
The electric vehicle maker reported revenue of $28.05 billion for the three months ended September 30, compared with analysts’ average estimate of $27.88 billion, according to LSEG data.
Revenue was $28.10 billion in the same quarter a year earlier.
Adjusted earnings per share came in at 48 cents, surpassing analysts’ estimate of 43 cents.
Tesla shares TSLA rose around 2% in extended trading following the results.
Tesla deliveries rebound as automotive business faces competition
Tesla delivered 486,532 vehicles in the third quarter, exceeding Wall Street expectations of approximately 461,100.
However, deliveries declined about 2% from a year earlier.
Production reached 464,391 vehicles, meaning deliveries exceeded output by more than 22,000 units for a second consecutive quarter, contributing to an inventory drawdown.
The Model 3 and Model Y accounted for nearly all deliveries.
Other models, including the Cybertruck, accounted for 8,295 deliveries, down from 12,364 in the second quarter.
Tesla has discontinued production of the Model S and Model X at its Fremont facility as it prepares to replace their production lines with its first large-scale Optimus humanoid robot production line.
The company’s core automotive business faces increasing competition from rivals introducing newer and often cheaper electric vehicles.
Tesla has responded by offering lower-priced versions of the Model 3 and Model Y and launching a six-seat Model Y in the United States in July.
Cash flow beats expectations as AI spending remains in focus
Tesla reported capital expenditure of $4.73 billion in the third quarter, below expectations of approximately $7.5 billion.
The figure was down from $5.79 billion in the previous quarter but above the $2.25 billion reported a year earlier.
Free cash flow reached $1.53 billion, compared with analysts’ expectations for a cash outflow of $4.92 billion.
The figures offer some relief as investors assess Tesla’s plans to increase investment in artificial intelligence, robotics and autonomous driving.
The company had targeted capital expenditure of $25 billion this year and arranged $30 billion in loans and credit lines to support its growth plans.
Tesla’s energy storage business has also become an increasingly important contributor, benefiting from demand for grid-scale batteries from renewable energy developers and data centres.
However, the company has warned that the current tariff regime will have a greater impact on its energy business than on its automotive operations.
Potential SpaceX merger adds another dimension to Tesla’s outlook
Tesla’s earnings arrived as investors assess the possibility of a combination with SpaceX, Musk’s rocket and space technology company.
Musk confirmed that the two companies had formed special committees to explore a potential merger.
However, he said no agreement had been reached and warned that a deal might not materialise, as it would require approval from a majority of Tesla shareholders.
Tesla’s earnings release did not provide further details about the discussions.
Meanwhile, the company is expanding its autonomous driving operations.
Tesla said earlier this month that its Cybercab fleet in Austin had grown from fewer than 40 vehicles to more than 300 in about a month, with Dallas identified as the next location for expansion.
Tesla has also launched unsupervised robotaxi rides in Miami, Orlando and Tampa, following launches in Dallas and Houston.
Tesla shares have fallen about 14% this year. Despite the decline, the company remains the world’s most valuable automaker, with a market capitalisation of approximately $1.4 trillion.
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