Tesla reported third-quarter 2026 results on October 21. Adjusted earnings came in at 48 cents per share, ahead of the 43 cents analysts expected according to LSEG, while revenue of $28.05 billion was roughly flat compared with $28.24 billion a year earlier.

The numbers

  • Automotive revenue fell 3% year over year to $20.56 billion.
  • Energy revenue fell 16% to $2.88 billion.
  • Services and other revenue rose 33% to $4.61 billion.
  • Net income attributable to shareholders was $787 million, down 29%.
  • Capital expenditures more than doubled to $3.73 billion, and free cash flow fell 62% to $1.53 billion.
  • Deliveries, reported earlier in October, were 486,532, about 2% below the year-ago quarter.

FSD is the growth story

Active FSD (Supervised) subscriptions rose 67% to 1.74 million. The subscription costs $99 per month in the U.S.

Robotaxi and Cybercab

According to the Texas DMV, 362 Model Y Robotaxis and 449 Cybercabs are authorized for driverless operation. Musk said the Robotaxi fleet should start contributing to Tesla’s financials in 2027, and the company expects some customer cars to get FSD (Unsupervised) around the second quarter of 2027.

Also on the call

  • On Optimus, Musk put the finish line for the robot’s design, reliability and AI problems at roughly late next year.
  • Tesla and SpaceX have formed special board committees to weigh a possible merger.
  • Tesla is building a semiconductor factory with SpaceX and Intel in Grimes County, Texas.

Shares fell more than 3% in extended trading after the report.

Reading the numbers

Beating earnings estimates while revenue stays flat and profit falls can sound contradictory. It isn’t. Analysts had expected a weak quarter, so the bar was low, and adjusted earnings per share excludes some costs that the headline net income figure includes. The more telling figures are lower down the list.

Capital expenditure, the money spent on factories, equipment and computing hardware, more than doubled. Free cash flow, roughly the cash left after paying for running the business and those investments, fell by almost two-thirds. Put simply, Tesla is spending heavily now on projects that it hopes will pay off later, and its core car business is not growing fast enough to cover that spending without a hit to cash.

Why FSD subscriptions matter

Full Self-Driving (Supervised) is Tesla’s driver-assistance software. Despite the name, a human driver must stay attentive and ready to take over at all times, which is why Tesla added the word Supervised to the product name. Tesla sells it as a monthly subscription or a one-time purchase.

Subscriptions are valuable to Tesla for two reasons. Software brings much higher margins than building cars, and a growing base of paying users is evidence that drivers value the product today, not just in a future robotaxi world. A 67% jump in active subscriptions is one of the clearest positive signals in the report.

A long road to driverless

Tesla’s driverless ambitions have a long history of missed dates. In 2019, Musk said Tesla would have robotaxis on the road the following year. The company unveiled its two-seat Cybercab, built without a steering wheel or pedals, in October 2024, and began a limited paid Robotaxi service in Austin in mid-2025, initially with safety monitors on board. The Texas authorizations in this report show the fleet growing, but it is still small compared with Tesla’s millions of cars on the road.

What we think

This quarter shows two Teslas. One is a carmaker facing flat sales and falling profit. The other is a software and robotics company whose most important products, unsupervised driving, robotaxis and Optimus, are still mostly ahead of it. Investors are paying for the second one.

Given the company’s record on timelines, we treat 2027 targets for robotaxi revenue and unsupervised FSD as goals rather than firm plans. The numbers to watch over the next few quarters are FSD subscriptions, the size of the authorized driverless fleet, and whether free cash flow recovers as spending peaks.