Tesla Q3 revenue flat at $28 billion as Optimus production starts and SpaceX merger talks advance

Flat revenue and a sharp profit drop

Tesla reported third-quarter revenue of $28 billion on Wednesday, 21 October, a decline of less than 1% from a year earlier and short of the $28.2 billion that expectations had pointed to. Net income fell 43% to $787 million, trailing the $925 million expected. One account put net income at $1.7 billion with profit down 4%, a figure the other reports do not match. Vehicle revenue was flat at about $20 billion, and deliveries reached 486,532 in the quarter, a 2.1% drop from the third quarter of 2025 by one measure. Energy storage revenue fell 16% to $2.8 billion, which Tesla blamed on tariff-related customer refunds, while services revenue grew 33% to $4.6 billion. The delivery decline was widely expected after the $7,500 federal tax credit for electric vehicles expired on 30 September 2025, and Musk has warned of "a few rough quarters" ahead.

Capital spending reached $4.7 billion, more than double the level of a year earlier but well below the $7.8 billion S&P Capital IQ had expected.

Q3 2026 capex4.7

S&P Capital IQ expectation7.8

Q3 2026 capex

4.7 $ billion

S&P Capital IQ expectation

7.8 $ billion

Data from the article text

Optimus moves into production

Tesla has started producing its Optimus humanoid robot at its Fremont, California factory, a plant that once made only electric vehicles. In its third-quarter letter to shareholders, the company said:

“While we will continue to iterate on the hardware and manufacturing process, we have proven that the current manufacturing process for Optimus is suitable for a commercial product.”

Tesla also reported its largest backlog of vehicle orders in four years, which it linked largely to limited battery availability, and said it had made additional progress on its battery supply chain. At a demonstration in Waco, Texas, a redesigned two-seat Roadster prototype flew and flipped using cold-gas thrusters supplied by SpaceX. The re-reveal came nine years after the car was first announced, yet it did little to persuade skeptics that the Roadster will reach production in 2028, as promised.

Musk and a possible SpaceX merger

On Tuesday, 20 October, during SpaceX's earnings call, Musk said the two companies had formed special committees to consider a deal. Musk has also said a merger would be a "good idea" while claiming he would not take part in the process. Tesla shares rose 1.7% in after-hours trading. What comes next is whether Musk says more about the possible merger.

Starship targets and regulatory hurdles

On the SpaceX call, the company's focus was on rolling out up to 10 GW of compute in 2027, built on the ground. Its longer-term plan to provide data services from space still depends on the Starship rocket, and Musk and Gwynne Shotwell, SpaceX's president and chief operating officer, set new performance targets for the vehicle. The 14th test flight, more than three weeks earlier, largely went well despite some issues with the Raptor engine. SpaceX is targeting November for Flight 15 and hopes to catch both the Super Heavy first stage and the Starship upper stage at Starbase in South Texas. Musk said success is "more likely than not" and that the company is hardware rich should attempts fail.

Returning the vehicle to the launch site over land, including northern Mexico, is a key regulatory hurdle. Shotwell said:

“We have had significant constructive engagement with the FAA, and we expect the license for our Flight 15 to include return to launch site and tower catch for both stages.”

SpaceX also plans to refly a Starship upper stage early next year and to complete a long-delayed Starship-to-Starship refueling test early in 2027. That demonstration matters for NASA lunar missions, since refueling at this scale has never been done and the company needs data on transfer efficiency and the rate of liquid oxygen boil-off.