Tesla made $787 million in net income in the third quarter, down from $1.37 billion a year earlier, according to its third-quarter update, published on Wednesday. Revenue was flat at $28.05 billion. Operating expenses rose 39% as the company spent more on AI, robots and new products.
The same update says Tesla has started building its Optimus humanoid robot on high-volume lines in Fremont, California. On the earnings webcast that followed, executives said Tesla aims to get Cybercabs to customers by the end of the year. They also put unsupervised self-driving for customer cars at around the second quarter of 2027.
Spending outpaces sales
Operating expenses reached $4.78 billion, including $2.76 billion on research and development. Operating income fell 56% to $718 million, a margin of 2.6%. Capital spending more than doubled to $4.73 billion.
Chief financial officer Vaibhav Taneja said most of the rise in operating expenses came from AI development, chip development and getting products such as Optimus ready for production. He said those costs would keep growing until the new products are on sale. He put this year’s capital spending at about $20 billion. Tesla has also secured the ability to borrow up to $30 billion, though it does not plan to draw on it this year.
Cars still bring in most of the money. Automotive revenue slipped 3% to $20.56 billion. Energy revenue fell 16% to $2.88 billion, which Tesla partly blamed on tariff-related customer refunds. Services and other revenue, which includes Supercharging, insurance and the robotaxi business, grew 33% to $4.61 billion.
Income from regulatory credits, which carmakers buy when they miss emissions targets, fell to $113 million from $417 million. Free cash flow was $1.53 billion, after a negative $1.09 billion in the second quarter. Cash and investments rose to $45.4 billion.
Tesla booked a $142 million paper loss on the SpaceX shares it bought for $2 billion earlier this year. Taneja said a gain of about $290 million on its Bitcoin offset it. Tesla said it ended the quarter with its largest backlog of car orders in four years. Battery supply was still the main limit on output. It delivered 486,532 vehicles and built its 10 millionth car.
Optimus production begins
“The bots coming off this line are the first production-quality bots that we have manufactured,” Tesla wrote in its update.
Musk called it “early production” and said the ramp would be “somewhat bumpy” because the robot is so new. He said it would probably take at least a year, “maybe a little longer”, to reach a rate of 20,000 robots a week.
“There’s still some things we need to tweak about the design, because you need to deliver a robot that is safe and reliable and has long duration, so it can’t, like, wear out after a month,” Musk said.
He expects those problems to be solved around the end of next year, when Tesla would start delivering Optimus to other companies. Most of the remaining design work is on the hand, Musk said. In September, The Information reported that the robot’s hands were holding up production.
Cybercab sales, and another FSD delay
Every Cybercab built so far goes into Tesla’s own robotaxi fleet, said Lars Moravy, Tesla’s vice president of engineering. He said Tesla was trying to get them to customers by the end of 2026, starting small. Musk said the two-seater, which has no steering wheel, is mainly meant for ride-hailing.
“The vast majority of the Cybercab stuff will be essentially Tesla-owned and transport as a service,” Musk said.
The plan comes while the US vehicle safety regulator investigates the Cybercab over federal safety standards. Ashok Elluswamy, who leads Tesla’s AI software, said Cybercab rides would launch in Dallas next month. Musk said robotaxis would become “noticeable” in Tesla’s results in the second quarter of next year.
Owners waiting to let their own cars drive themselves will wait longer. More than 75% of new cars delivered in North America came with a subscription to Full Self-Driving, which still needs a driver watching the road. Active subscriptions rose 67% to 1.74 million. In April, Musk said the unsupervised version would “probably” arrive in the fourth quarter of this year, TechCrunch reported.
“We suspect somewhere around Q2 next year is when we can turn on some of the first customer vehicles to be part of the robotaxi fleet,” Elluswamy said.
Nothing new on SpaceX
The results came a day after Musk told SpaceX’s earnings call that both companies had formed special committees of independent directors to explore a merger. Tesla said it would take no questions on it, and Musk added nothing.
“I think I said everything that should be said yesterday, tap dancing through a minefield there,” Musk said.
Tesla shares fell more than 3% in after-hours trading, CNBC reported. In September, asked why Tesla and SpaceX were still separate companies, Musk had called it a “great question”.