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Tesla

TSLA · Nasdaq

Research now absorbs half of Tesla's gross profit

R&D of $2.76B equalled 50.3% of gross profit against 32.3% a year earlier, so a wider gross margin still produced less operating income.

Q3 FY2026, the quarter to Sep 30, 2026 · 10-Q filed Oct 22, 2026

Q3 FY2026 · revenue
$28.0B-0.2% on the year
Operating margin
2.6%
Net income
$787.0M
Free cash flow, quarter
$1.5B

Largest source of revenue: Automotive sales, 71.7% of the total.

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Key insights · Q3 FY2026
  1. 01

    Research now absorbs half of Tesla's gross profit

    R&D of $2.76B equalled 50.3% of gross profit against 32.3% a year earlier, so a wider gross margin still produced less operating income.

    Why it matters

    Gross profit rose 8.71% to $5.49B as gross margin widened 1.6 points to 19.59%. Research and development rose 69.39% to $2.76B, and total operating expenses rose 39.24% to $4.78B, equal to 86.9% of gross profit against 67.9% a year earlier. Income from operations fell 55.79% to $718M, an operating margin of 2.56%, down 3.22 points.1

    The filing ties the research increase to super intelligence work and programs such as Optimus, silicon development, battery technologies and new vehicles, plus higher stock-based compensation. It states that this investment "will negatively impact our profitability during this phase". SG&A also rose 29.0% to $2.02B, driven mostly by stock-based compensation tied to the CEO performance award.1

    The longer record shows the same direction. At the annual peak of gross profit, $20.85B on $81.46B of revenue, the operating margin was 16.8%. In the latest full year it was 4.6%, $4.36B of operating income on $94.83B of revenue, while gross margin went from 25.6% to 18.0%. Operating costs grew over that span while gross profit shrank.1

    AnalysisAnalysis: this quarter's profit squeeze came from the spending side. Gross profit grew; the company chose to reinvest more of it. Whether that reads as investment depends on the products it names, Robotaxi, Cybercab and Optimus, producing revenue lines of their own, which this filing does not yet report.

  2. 02

    Interest on cash equals 62% of operating profit

    Interest income of $445M equalled 62.0% of the $718M operating income, against 27.0% a year earlier, lifting pre-tax income above operating income.

    Why it matters

    Interest income was $445M, up 1.37%, almost unchanged, while income from operations fell 55.79% to $718M. Interest income went from 27.0% of operating income a year earlier, $439M against $1.62B, to 62.0%. Income before income taxes, $956M, came out above operating income.1

    The filing attributes the interest to a larger average balance of cash, cash equivalents and short-term investments, partly offset by a lower average interest rate. Other expense of $117M, against $28M a year earlier, worked the other way: the filing names mark-to-market moves on the SpaceX stake and on bitcoin, and currency swings on intercompany balances it does not typically hedge.1

    Tax narrowed the fall further. The provision for income taxes was $152M on $956M of pre-tax income, an effective rate of 15.9%, against $570M on $1.96B, or 29.1%, a year earlier. The filing attributes the drop mainly to the mix of jurisdictional earnings. Net income attributable to common stockholders fell 42.68% to $787M, a smaller fall than operating income.1

    AnalysisAnalysis: interest income depends on the size of the cash reserve and on rates, not on selling cars or batteries. If heavy capital spending draws the reserve down, or rates fall, this cushion under reported profit would shrink even with the operating business unchanged.

  3. 03

    Operating cash still covers capital spending that doubled

    Capital spending of $4.73B was 2.1 times a year earlier, yet took 75.6% of operating cash flow, leaving free cash flow of $1.53B.

    Why it matters

    Operating cash flow was $6.26B, level with $6.24B a year earlier, while capital expenditure rose to $4.73B from $2.25B. Capital spending took 75.6% of operating cash flow, against 36.0% a year earlier, and free cash flow fell to $1.53B from $3.99B. Capital expenditure equalled 16.87% of revenue.1

    Operating cash flow was 7.96 times net income attributable to common stockholders of $787M. Over the nine months, the filing credits most of the rise in operating cash flow to favorable changes in operating assets and liabilities, and says that shorter days sales outstanding than days payable outstanding help its sales growth turn into cash.1

    AnalysisAnalysis: part of that cash comes from timing, collecting from customers sooner than paying suppliers, rather than from profit, and timing gains can reverse when growth slows. Reported profit and cash flow tell different stories this quarter, and each needs reading alongside the other.

  4. 04

    Services, not new cars, carried the quarter's growth

    Services and other revenue rose 32.52% to $4.61B, now 22.9% of automotive sales, while automotive sales slipped 1.3% on fewer deliveries.

    Why it matters

    Total revenues were flat at $28.05B, down 0.17%, but the mix moved. Services and other gained 4.05 points of revenue share to 16.42%. Automotive sales fell 1.3% to $20.09B, which the filing explains by a decrease of approximately 2% in cash deliveries, mainly fewer Model S and Model X after their sunset, partly offset by a weaker dollar and higher FSD (Supervised) subscription revenue.1

    The filing attributes the services rise to "increases in used vehicle sales volume and average selling price, non-warranty maintenance services and collision revenue, and paid Supercharging sessions". Cost of services and other was $3.87B, or 84.1% of the line's revenue, so services adds revenue at a thinner margin than the company as a whole, whose gross margin was 19.59%.1

    AnalysisAnalysis: most of this line rides on the installed fleet, through used cars, repairs, collision work and charging, rather than on new units. It can keep growing while new-car volume stalls, but at a margin below the company average it shifts the revenue mix more than the profit mix.

Sources

  1. 1.Tesla 10-Q for the period to 2026-09-30 (the filing), Oct 22, 2026, read Nov 2, 2026

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Business performance

Growth, profit and margin

Revenue went from $111.9M in FY2009 to $94.8B in FY2025, the operating margin from -46.4% to 4.6%, over 16 years.

  • Revenue$94.8B
  • Operating income$4.4B
  • Operating margin4.6%
Period
Q3 FY2026
Revenue
$28.0B
Operating income
$718.0M
Operating margin
2.6%
Net income
$787.0M
Free cash flow
$1.5B
Business performance

Does the profit turn into cash?

Q3 FY2026: free cash flow of $1.5B against net income of $787.0M in the quarter.

  • Operating cash flow$14.7B
  • Capital expenditure$8.5B
  • Free cash flow$6.2B
  • Net income$3.8B

Capital expenditure is drawn below the axis as cash out. Cash conversion is operating cash flow over net income, shown in the tooltip for years with a profit.

Financial data and sources

How the revenue mix has shifted

Each breakdown the filing reports, as shares of revenue, for every period it restates.

Revenue streams

Summary of Significant Accounting Policies - Schedule of Disaggregation of Revenue by Major Source (Details). The filing restates this breakdown for 1 period.

Click a member to isolate it across the years shown.

The figures

Margins, cash and growth for the period, each with what it was computed from.

Gross margin
19.6%
Source10-Q, Derived from Gross profit and Total revenues in the 10-Q filed 2026-10-22
Operating margin
2.6%
Source10-Q, Derived from Income from operations and Total revenues in the 10-Q filed 2026-10-22
Net margin
2.8%
Source10-Q, Derived from Net income attributable to common stockholders and Total revenues in the 10-Q filed 2026-10-22
Free cash flow, quarter
$1.5B
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-10-22
Free cash flow margin, quarter
5.5%
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-10-22
Cash conversion, quarter
7.96x
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-10-22
Capital spending, quarter
16.9%
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-10-22
Revenue growth
-0.2%
From the record's own history, against the prior year.

Where revenue comes from

Every breakdown the filing reports for the period, with each item's share.

Revenue streams

Automotive sales$20.1B71.6%
Services and other$4.6B16.4%
Energy generation and storage sales$2.7B9.8%
Automotive leasing$353.0M1.3%
Energy generation and storage leasing$136.0M0.5%
Automotive regulatory credits$113.0M0.4%

Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, as reported in the 10-Q filed 2026-10-22

What it costs

The cost lines beneath operating income, each as a share of revenue, then the operating result.

Costs are reported by function: what it cost to make what was sold, then the expenses of selling, developing and administering.

Cost lineQ3 FY2026Of revenueSource
Total cost of revenues$22.6B80.4%Source10-Q, us-gaap:CostOfRevenue, as reported in the 10-Q filed 2026-10-22
Income from operations$718.0M2.6%Source10-Q, us-gaap:OperatingIncomeLoss, as reported in the 10-Q filed 2026-10-22

Operating figures the company states

From the text of the filing rather than its statements, each with the sentence that states it.

Cash deliveries, decrease vs the same quarter a year earlier
2.0%
As of Sep 30, 2026
View source
due to a decrease of approximately 2% in cash deliveries, primarily from fewer Model S and Model X deliveries after the product sunset in mid-2026
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, 10-Q filed Oct 22, 2026
Cash deliveries, increase vs the first nine months a year earlier
10.0%
As of Sep 30, 2026
View source
due to an increase of approximately 10% in cash deliveries, in part from bringing down all of our vehicle factories simultaneously for the changeover to the New Model Y in the prior period
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, 10-Q filed Oct 22, 2026
Consumer vehicles delivered, year to date
1,320,000 vehicles
As of Sep 30, 2026
View source
In 2026, we produced approximately 1.32 million consumer vehicles and delivered approximately 1.32 million consumer vehicles through the third quarter.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, 10-Q filed Oct 22, 2026
Consumer vehicles produced, year to date
1,320,000 vehicles
As of Sep 30, 2026
View source
In 2026, we produced approximately 1.32 million consumer vehicles and delivered approximately 1.32 million consumer vehicles through the third quarter.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, 10-Q filed Oct 22, 2026
Energy storage deployed, year to date
36 gwh
As of Sep 30, 2026
View source
In 2026, we deployed 36.0 GWh of energy storage products through the third quarter.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, 10-Q filed Oct 22, 2026

The statements, as filed

The income statement, cash flow statement and balance sheet in the company's own order and words. Every line links to the filing.

Income statement31 lines, as presented in the 10-Q
LineQ3 FY2026A year earlierChangeOf revenueSource
Revenues
Total revenues$28.05B$28.10B-0.2%100%Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, as reported in the 10-Q filed 2026-10-22
Automotive Revenues$20.56B$21.21B-3.0%73.3%Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax [tsla:AutomotiveRevenuesMember], as reported in the 10-Q filed 2026-10-22
Automotive sales$20.09B$20.36B-1.3%71.6%Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax [tsla:AutomotiveSalesMember], as reported in the 10-Q filed 2026-10-22
Automotive regulatory credits$113.0M$417.0M-73%0.4%Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax [tsla:AutomotiveRegulatoryCreditsMember], as reported in the 10-Q filed 2026-10-22
Automotive leasing$353.0M$429.0M-18%1.3%Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax [tsla:AutomotiveLeasingMember], as reported in the 10-Q filed 2026-10-22
Energy generation and storage$2.88B$3.42B-16%10.3%Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax [tsla:EnergyGenerationAndStorageMember], as reported in the 10-Q filed 2026-10-22
Services and other$4.61B$3.48B+33%16.4%Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax [tsla:ServicesAndOtherMember], as reported in the 10-Q filed 2026-10-22
Cost of revenues
Total cost of revenues$22.55B$23.04B-2.1%80.4%Source10-Q, us-gaap:CostOfRevenue, as reported in the 10-Q filed 2026-10-22
Automotive Revenues$16.75B$17.59B-4.8%59.7%Source10-Q, us-gaap:CostOfRevenue [tsla:AutomotiveRevenuesMember], as reported in the 10-Q filed 2026-10-22
Automotive sales$16.57B$17.37B-4.6%59.1%Source10-Q, us-gaap:CostOfRevenue [tsla:AutomotiveSalesMember], as reported in the 10-Q filed 2026-10-22
Automotive leasing$184.0M$225.0M-18%0.7%Source10-Q, us-gaap:CostOfRevenue [tsla:AutomotiveLeasingMember], as reported in the 10-Q filed 2026-10-22
Energy generation and storage$1.93B$2.34B-18%6.9%Source10-Q, us-gaap:CostOfRevenue [tsla:EnergyGenerationAndStorageMember], as reported in the 10-Q filed 2026-10-22
Services and other$3.87B$3.11B+25%13.8%Source10-Q, us-gaap:CostOfRevenue [tsla:ServicesAndOtherMember], as reported in the 10-Q filed 2026-10-22
Income Statement
Gross profit$5.49B$5.05B+8.7%19.6%Source10-Q, us-gaap:GrossProfit, as reported in the 10-Q filed 2026-10-22
Operating expenses
Research and development$2.76B$1.63B+69%9.8%Source10-Q, us-gaap:ResearchAndDevelopmentExpense, as reported in the 10-Q filed 2026-10-22
Selling, general and administrative$2.02B$1.56B+29%7.2%Source10-Q, us-gaap:SellingGeneralAndAdministrativeExpense, as reported in the 10-Q filed 2026-10-22
Restructuring and other$0$238.0M0.0%Source10-Q, tsla:RestructuringAndOtherExpenses, as reported in the 10-Q filed 2026-10-22
Total operating expenses$4.78B$3.43B+39%17.0%Source10-Q, us-gaap:OperatingExpenses, as reported in the 10-Q filed 2026-10-22
Income Statement
Income from operations$718.0M$1.62B-56%2.6%Source10-Q, us-gaap:OperatingIncomeLoss, as reported in the 10-Q filed 2026-10-22
Interest income$445.0M$439.0M+1.4%1.6%Source10-Q, us-gaap:InvestmentIncomeInterest, as reported in the 10-Q filed 2026-10-22
Interest expense (shown as a deduction)($90.0M)$76.0M+18%0.3%Source10-Q, us-gaap:InterestExpenseNonoperating, as reported in the 10-Q filed 2026-10-22
Other (expense) income, net-$117.0M-$28.0M+318%0.4%Source10-Q, us-gaap:OtherNonoperatingIncomeExpense, as reported in the 10-Q filed 2026-10-22
Income before income taxes$956.0M$1.96B-51%3.4%Source10-Q, us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest, as reported in the 10-Q filed 2026-10-22
Provision for income taxes$152.0M$570.0M-73%0.5%Source10-Q, us-gaap:IncomeTaxExpenseBenefit, as reported in the 10-Q filed 2026-10-22
Net income$804.0M$1.39B-42%2.9%Source10-Q, us-gaap:ProfitLoss, as reported in the 10-Q filed 2026-10-22
Net income attributable to noncontrolling interests and redeemable noncontrolling interests in subsidiaries$17.0M$16.0M+6.3%0.1%Source10-Q, us-gaap:NetIncomeLossAttributableToNoncontrollingInterest, as reported in the 10-Q filed 2026-10-22
Net income attributable to common stockholders$787.0M$1.37B-43%2.8%Source10-Q, us-gaap:NetIncomeLoss, as reported in the 10-Q filed 2026-10-22
Net income per share of common stock attributable to common stockholders
Basic (in dollars per share)$0$0-44%0.0%Source10-Q, us-gaap:EarningsPerShareBasic, as reported in the 10-Q filed 2026-10-22
Diluted (in dollars per share)$0$0-44%0.0%Source10-Q, us-gaap:EarningsPerShareDiluted, as reported in the 10-Q filed 2026-10-22
Weighted average shares used in computing net income per share of common stock
Basic (in shares)3,240,000,0003,227,000,000+0.4%Source10-Q, us-gaap:WeightedAverageNumberOfSharesOutstandingBasic, as reported in the 10-Q filed 2026-10-22
Diluted (in shares)3,541,000,0003,526,000,000+0.4%Source10-Q, us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding, as reported in the 10-Q filed 2026-10-22
Cash flow statement2 lines, as presented in the 10-Q

Year to date, as a quarterly filing reports it.

LineQ3 FY2026A year earlierChangeSource
Cash Flows from Operating Activities
Net income$804.0M$1.39B-42%Source10-Q, us-gaap:ProfitLoss, as reported in the 10-Q filed 2026-10-22
Statement of Cash Flows
Cash and cash equivalents and restricted cash, end of period$19.01B$19.58B-3.0%Source10-Q, us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsIncludingDisposalGroupAndDiscontinuedOperations, as reported in the 10-Q filed 2026-10-22
Balance sheet32 lines, as presented in the 10-Q
LineQ3 FY2026A year earlierChangeSource
Current assets
Cash and cash equivalents$17.85B$18.29B-2.4%Source10-Q, us-gaap:CashAndCashEquivalentsAtCarryingValue, as reported in the 10-Q filed 2026-10-22
Short-term investments$27.59BSource10-Q, us-gaap:ShortTermInvestments, as reported in the 10-Q filed 2026-10-22
Accounts receivable, net$4.64BSource10-Q, us-gaap:AccountsReceivableNetCurrent, as reported in the 10-Q filed 2026-10-22
Inventory$14.09BSource10-Q, us-gaap:InventoryNet, as reported in the 10-Q filed 2026-10-22
Prepaid expenses and other current assets$6.23BSource10-Q, us-gaap:PrepaidExpenseAndOtherAssetsCurrent, as reported in the 10-Q filed 2026-10-22
Total current assets$70.40BSource10-Q, us-gaap:AssetsCurrent, as reported in the 10-Q filed 2026-10-22
Assets
Operating lease vehicles, net$4.05BSource10-Q, us-gaap:DeferredCostsLeasingNetNoncurrent [tsla:OperatingLeaseVehiclesMember], as reported in the 10-Q filed 2026-10-22
Energy generation and storage systems, net$4.45BSource10-Q, tsla:LeasedAssetsNet [tsla:EnergyGenerationAndStorageSystemsMember], as reported in the 10-Q filed 2026-10-22
Property, plant and equipment, net$50.59BSource10-Q, us-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortization, as reported in the 10-Q filed 2026-10-22
Operating lease right-of-use assets$6.56BSource10-Q, us-gaap:OperatingLeaseRightOfUseAsset, as reported in the 10-Q filed 2026-10-22
Digital assets$962.0MSource10-Q, us-gaap:CryptoAssetFairValueNoncurrent, as reported in the 10-Q filed 2026-10-22
Deferred tax assets$7.91BSource10-Q, us-gaap:DeferredIncomeTaxAssetsNet, as reported in the 10-Q filed 2026-10-22
Other non-current assets$12.60BSource10-Q, us-gaap:OtherAssetsNoncurrent, as reported in the 10-Q filed 2026-10-22
Total assets$157.52BSource10-Q, us-gaap:Assets, as reported in the 10-Q filed 2026-10-22
Current liabilities
Accounts payable$17.24BSource10-Q, us-gaap:AccountsPayableCurrent, as reported in the 10-Q filed 2026-10-22
Accrued liabilities and other$17.21BSource10-Q, tsla:AccruedAndOtherCurrentLiabilities, as reported in the 10-Q filed 2026-10-22
Deferred revenue$4.66BSource10-Q, us-gaap:ContractWithCustomerLiabilityCurrent, as reported in the 10-Q filed 2026-10-22
Current portion of debt and finance leases$1.39BSource10-Q, tsla:LongTermDebtAndFinanceLeasesCurrent, as reported in the 10-Q filed 2026-10-22
Total current liabilities$40.49BSource10-Q, us-gaap:LiabilitiesCurrent, as reported in the 10-Q filed 2026-10-22
Liabilities
Debt and finance leases, net of current portion$8.14BSource10-Q, tsla:LongTermDebtAndFinanceLeasesNoncurrent, as reported in the 10-Q filed 2026-10-22
Deferred revenue, net of current portion$4.13BSource10-Q, us-gaap:ContractWithCustomerLiabilityNoncurrent, as reported in the 10-Q filed 2026-10-22
Other long-term liabilities$14.87BSource10-Q, us-gaap:OtherLiabilitiesNoncurrent, as reported in the 10-Q filed 2026-10-22
Total liabilities$67.63BSource10-Q, us-gaap:Liabilities, as reported in the 10-Q filed 2026-10-22
Statement of Financial Position
Redeemable noncontrolling interests in subsidiaries$54.0MSource10-Q, us-gaap:RedeemableNoncontrollingInterestEquityCarryingAmount, as reported in the 10-Q filed 2026-10-22
Stockholders’ equity
Preferred stock; $0.001 par value; 100 shares authorized; no shares issued and outstanding$0Source10-Q, us-gaap:PreferredStockValue, as reported in the 10-Q filed 2026-10-22
Common stock; $0.001 par value; 6,000 shares authorized; 3,953 and 3,751 shares issued and outstanding as of September 30, 2026 and December 31, 2025, respectively$4.0MSource10-Q, us-gaap:CommonStockValue, as reported in the 10-Q filed 2026-10-22
Additional paid-in capital$47.42BSource10-Q, us-gaap:AdditionalPaidInCapitalCommonStock, as reported in the 10-Q filed 2026-10-22
Accumulated other comprehensive income$489.0MSource10-Q, us-gaap:AccumulatedOtherComprehensiveIncomeLossNetOfTax, as reported in the 10-Q filed 2026-10-22
Retained earnings$41.38BSource10-Q, us-gaap:RetainedEarningsAccumulatedDeficit, as reported in the 10-Q filed 2026-10-22
Total stockholders’ equity$89.29BSource10-Q, us-gaap:StockholdersEquity, as reported in the 10-Q filed 2026-10-22
Equity
Noncontrolling interests in subsidiaries$546.0MSource10-Q, us-gaap:MinorityInterest, as reported in the 10-Q filed 2026-10-22
Statement of Financial Position
Total liabilities and equity$157.52BSource10-Q, us-gaap:LiabilitiesAndStockholdersEquity, as reported in the 10-Q filed 2026-10-22

About this data

Source
Tesla 10-Q, accession 0001628280-26-066775, filed Oct 22, 2026, read on Nov 2, 2026.
History
From the SEC's XBRL company facts, the value from the latest filing that stated each period.
Reading
Paragraphs marked Analysis are CXProWealth's reading; everything else is the filing's own numbers and words, or a cited source.
Version
methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02
Edge and risks

What holds Tesla's model up, and what could bend it

Competitive edge

  • Unit cost fell faster than revenue

    Cost of revenues fell 2.12% against a 0.17% revenue dip, lifting gross margin 1.6 points to 19.59% with no help from volume.

    The detail

    Cost of automotive sales was $16.57B against $17.37B a year earlier, or 82.5% of automotive sales revenue of $20.09B. Besides fewer deliveries, the filing names "a lower average cost per unit from sales mix and a favorable impact from tariff refunds", and credits localized procurement and manufacturing and the vertical integration of its battery and semiconductor supply chains for keeping its vehicles competitively priced.1

    AnalysisAnalysis: part of this quarter's gain comes from tariff refunds after a court ruling, which the filing books as reductions of cost and which are not a recurring source of margin. The lasting edge is the cost work itself; the test is whether the margin holds once the refunds have passed through.

  • A large fleet feeds software and data

    About 1.32 million vehicles delivered through the third quarter widen the base for FSD subscriptions and for the driving data the company trains on.

    The detail

    The company calls FSD (Supervised) a key growth driver and product differentiator, and describes a "compounding, positive feedback loop" in which fleet growth generates more data that improves the technology and drives further fleet growth. It credits higher FSD (Supervised) subscription revenue for part of the gap between automotive sales down 1.3% and cash deliveries down approximately 2%.1

    AnalysisAnalysis: a subscription sold to a car already on the road adds revenue without another vehicle to build. The filing does not report subscription revenue on its own line, so the size of this stream cannot yet be read from the figures.

  • Energy storage rides rising demand on the grid

    Tesla deployed 36.0 GWh of storage through the third quarter, and the filing sees power load growth from compute as an opening for grid storage.

    The detail

    The company says it is raising production to meet high levels of demand, ramping Megafactories in Shanghai and Lathrop, California, and starting production at a new Megafactory near Houston this quarter. It shipped its first Megapack with LFP cells made at Gigafactory Nevada, part of localizing supply. Energy generation and storage sales were 9.79% of revenue.1

    The line's sales still fell 16.34% to $2.75B. The filing names tariff refunds owed to certain Megapack customers, a lower average selling price per Megapack, fewer Powerwall deployments and fewer solar retrofit cash deployments, partly offset by more Megapack deployments, and says deployments can vary meaningfully from quarter to quarter with project timing.1

What to watch

  • Policy is already moving the numbers

    Regulatory credits fell 72.9% to $113M, from 25.7% of operating income a year earlier to 15.7%, after rules restricted credit programs.

    The detail

    The filing says recent governmental and regulatory actions have restricted certain regulatory credit programs tied to its products, and that it reversed credits revenue for the contractual return of credits delivered earlier. Credits now make up 0.4% of revenue.1

    Trade policy cuts both ways. Tariff refunds after a court ruling reduced both automotive and energy cost of revenues this quarter, but the company says the current tariff regime weighs more on energy than on automotive, and that import tariffs and the One Big Beautiful Bill Act could significantly raise battery cell costs and prices for customers, weighing on demand.1

  • Autonomy must earn back the research bill

    Research spending of $2.76B, 9.84% of revenue, rests on autonomy and robotics that face evolving regulation and lawsuits over driver assistance.

    The detail

    The company says scaling autonomy faces evolving regulations, the resources required for SI inference and training, and the operating and infrastructure support a robotaxi fleet needs, any of which could set back its timelines and results. Research and development rose 4.04 points as a share of revenue.1

    It also faces proposed class actions and a securities suit over statements about Autopilot, FSD (Supervised) and Robotaxi, regulatory inquiries including from the National Highway Traffic Safety Administration, and a jury verdict over an Autopilot-related accident that it has appealed. The company says an unfavorable outcome could materially affect results in a given period.1

    AnalysisAnalysis: the products this spending is meant to build do not yet appear as separate revenue lines in the filing. Until they do, the cost shows in the numbers before any payoff does.

  • The build may outgrow the cash it generates

    Capital spending of $5.79B outran $4.70B of operating cash flow the quarter before, and the filing expects heavy spending to need outside funding.

    The detail

    Free cash flow swung from negative $1.09B the quarter before to $1.53B this quarter, so coverage is uneven. The company says heavy capital spending, rising material prices and higher supply chain and labor costs will necessitate funding beyond operating cash flow, and it entered new credit agreements in September to add flexibility.1

    The company names the uncertainty of ramping new products and factories at the same time, including Cybercab, the Tesla Semi, battery materials and its own cells, and says the pace of capital spending may vary with project priorities and milestones.1

Sources

  1. 1.Tesla 10-Q for the period to 2026-09-30 (the filing), Oct 22, 2026, read Nov 2, 2026
Go deeper

Tesla, further in

Member research, then your own questions on ChatGPT.

What could change the outlook

What Tesla's numbers depend on from here, read from the filing: the conditions behind this period's margins and growth, and where a change would show first.

  • What the research bill has to deliver

    Which products would have to start reporting revenue for today's spending to read as investment rather than margin erosion, and the signals to watch in each new filing.

  • How much of the margin gain is built to last

    Separating one-off tariff effects from lasting unit-cost progress, and what the gross margin depends on once the refunds have passed through.

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Questions to start with
  • What would Tesla's operating margin have been if research spending had grown only as fast as gross profit?
  • How much of Tesla's pre-tax income now comes from interest on its cash, and what would lower rates do to it?
  • Can Tesla's operating cash flow keep covering its capital spending as Cybercab, Optimus and new factories ramp?

Business Lens describes Tesla from its own filings with the SEC. It is not a view on its shares, a target, or advice to buy, sell or hold anything; figures are as filed and may be restated by the company later. The filing, the dates and the version are under the financial data above.