Tesla, Inc.
TSLA10-Q,quarter ended Sep 30, 2026,filed Oct 22, 2026,Original on SEC.gov (opens in a new tab)
3 of 3 checkable figures match the filing, 4 of 4 risk excerpts located in the filing text
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The Print
Tesla reported Q3 2026 revenue of $28.05B, essentially flat versus $28.10B a year earlier, while net income attributable to common stockholders fell to $787M from $1,373M and diluted EPS declined to $0.22 from $0.39.
Revenue was essentially unchanged YoY (down $49M), but profitability shifted: gross profit rose to $5,494M from $5,054M while operating income fell to $718M from $1,624M. Management attributes the R&D increase of $1.13B, or 69%, primarily to increases in costs related to SI and other programs, such as Optimus, silicon development, battery technologies, and new vehicle programs, and increases in stock-based compensation. SG&A rose $453M, or 29%, driven by a $293M increase in stock-based compensation primarily related to the 2025 CEO Performance Award.
- Total revenue of $28.05B was down $49M YoY, with automotive revenue down 3% and energy generation and storage revenue down 16%, partly offset by services and other revenue up 33%.
- Operating income fell to $718M from $1,624M as total operating expenses rose to $4,776M from $3,430M, including R&D up 69% to $2,761M.
- Net income attributable to common stockholders was $787M ($0.22 diluted EPS) versus $1,373M ($0.39 diluted EPS) in the prior-year quarter.
- Total gross margin rose to 19.6% from 18.0% even as operating margin compressed to 2.6% from 5.8%.
Results That Matter
- Total revenues
- Current period
- $28.0B
- Prior period
- $28.1B
- Change
- −0.2%
Revenue was essentially flat YoY; automotive revenue declined 3% and energy generation and storage revenue declined 16%, offset by a 33% increase in services and other revenue. - Gross profit
- Current period
- $5.5B
- Prior period
- $5.1B
- Change
- +8.7%
Total gross margin rose to 19.6% from 18.0%; management attributes the automotive gross margin increase primarily to the fluctuations in automotive sales revenue and cost of automotive sales revenue, partially offset by a decrease in regulatory credits revenue. - Income from operations
- Current period
- $718.0M
- Prior period
- $1.6B
- Change
- −55.8%
Operating income declined as total operating expenses rose to $4,776M from $3,430M, including R&D up 69% and SG&A up 29%. - Net income attributable to common stockholders
- Current period
- $787.0M
- Prior period
- $1.4B
- Change
- unavailable
Net income attributable to common stockholders declined $586M YoY, with the effective tax rate falling to 16% from 29%. - Diluted EPS
- Current period
- $0.22
- Prior period
- $0.39
- Change
- −43.6%
Diluted EPS declined in line with the net income decline; diluted weighted average shares were 3,541M versus 3,526M. - Basic EPS
- Current period
- $0.24
- Prior period
- $0.43
- Change
- −44.2%
Basic EPS declined with net income attributable to common stockholders.
| Metric | Current Period | Prior Period | Change | Investor Takeaway |
|---|---|---|---|---|
| $28.0B | $28.1B | −0.2% | Revenue was essentially flat YoY; automotive revenue declined 3% and energy generation and storage revenue declined 16%, offset by a 33% increase in services and other revenue. | |
| $5.5B | $5.1B | +8.7% | Total gross margin rose to 19.6% from 18.0%; management attributes the automotive gross margin increase primarily to the fluctuations in automotive sales revenue and cost of automotive sales revenue, partially offset by a decrease in regulatory credits revenue. | |
| $718.0M | $1.6B | −55.8% | Operating income declined as total operating expenses rose to $4,776M from $3,430M, including R&D up 69% and SG&A up 29%. | |
| $787.0M | $1.4B | unavailable | Net income attributable to common stockholders declined $586M YoY, with the effective tax rate falling to 16% from 29%. | |
| $0.22 | $0.39 | −43.6% | Diluted EPS declined in line with the net income decline; diluted weighted average shares were 3,541M versus 3,526M. | |
| $0.24 | $0.43 | −44.2% | Basic EPS declined with net income attributable to common stockholders. |
What changed
Quarter over quarter, against the 10-Q for the quarter ended Jun 30, 2026.
Prior 10-QRevenue down 0.7%; Net income down 29.4%
| Metric | Prior | Current | Change | Read as |
|---|---|---|---|---|
| Revenue | $28.2B | $28.0B | −0.7% | Unfavorable |
| Net income | $1.1B | $787.0M | −29.4% | Unfavorable |
| EPS (diluted) | $0.32 | $0.22 | −31.2% | Unfavorable |
- Revenue−0.7%Prior $28.2B, current $28.0BUnfavorable
- Net income−29.4%Prior $1.1B, current $787.0MUnfavorable
- EPS (diluted)−31.2%Prior $0.32, current $0.22Unfavorable
▲ and ▼ show the direction of each change. Color and “Read as” show whether that direction is usually favorable for the metric.
Earnings Quality & Cash Conversion
Reported operating income of $718M includes the effect of a $475M reversal of automotive regulatory credits revenue for contractual return of previously delivered credits during the three and nine months ended September 30, 2026. Other (expense) income, net of $(117)M includes mark-to-market adjustments on the SpaceX equity investment (a $142M loss in the quarter and an $863M gain for the nine months) and adjustments on bitcoin digital assets. Stock-based compensation was $3,346M for the nine months, up from $1,871M, including amounts related to the 2025 CEO Performance Award.
Red flag
Red flag
Red flag
Value Drivers & Capital Allocation
“We currently expect our capital expenditures to be in excess of $20 billion in 2026, driven by our SI initiatives, including investments in compute infrastructure and data centers, the expansion and ramp of our manufacturing and R&D production lines and facilities, and growth in our fleet of company-operated SI-enabled assets and our retail, service and charging footprint.”
Filing statement
“For example, in September 2026, we entered into three credit agreements providing aggregate commitments of $30 billion, which afford us additional flexibility to support our planned investments, as described above.”
Filing statement
Period net income attributable to the parent / period-end equity, not annualized: 0.9%; period net income attributable to the parent / period-end assets, not annualized: 0.5%.
Forward Signals
Management states it currently expects capital expenditures to be in excess of $20 billion in 2026, driven by SI initiatives including compute infrastructure and data centers, manufacturing and R&D expansion, and growth in company-operated SI-enabled assets. No revenue or earnings guidance is provided.
Known trends
- Management states that uncertainty in the automotive and energy markets continues as a result of rapidly evolving trade and fiscal policy and geopolitical conflicts, posing risks to the global supply chain and cost structure.
- Management states the current tariff regime will have a relatively larger impact on the energy generation and storage business compared to the automotive business.
- Management states that import tariffs by the US government and the provisions of the One Big Beautiful Bill Act could significantly increase battery cell expenses and impact costs for consumers, negatively impacting consumer demand.
- Management states that energy storage deployments can vary meaningfully quarter to quarter depending on the timing of specific project milestones and logistics.
Subsequent events
- Not disclosed—no material events after September 30, 2026 are described in the provided excerpts.
“We are also investing heavily in research and development to accelerate our SI, software and fleet-based profits for further revenue growth, which will negatively impact our profitability during this phase.”
Tesla, Inc. (MD&A)
“We currently expect our capital expenditures to be in excess of $20 billion in 2026, driven by our SI initiatives, including investments in compute infrastructure and data centers, the expansion and ramp of our manufacturing and R&D production lines and facilities, and growth in our fleet of company-operated SI-enabled assets and our retail, service and charging footprint.”
Tesla, Inc. (MD&A)
Risks
Excerpts are the filing’s own words; each heading is the start of its excerpt. Selected excerpts are not a complete risk inventory.
During the three and nine months ended September 30, 2026, we reversed $475 million of automotive…
During the three and nine months ended September 30, 2026, we reversed $475 million of automotive regulatory credits revenue for contractual return of previously delivered credits.
Our maximum exposure on the guarantees we provide if they are unable to sell the vehicle at or above…
Our maximum exposure on the guarantees we provide if they are unable to sell the vehicle at or above the vehicle’s contractual residual value at the end of the lease term was $4.42 billion and $3.45 billion as of September 30, 2026 and December 31, 2025, respectively.
The current tariff regime will have a relatively larger impact on our energy generation and storage…
The current tariff regime will have a relatively larger impact on our energy generation and storage business compared to our automotive business.
As of September 30, 2026, one customer accounted for over 10% of our accounts receivable…
As of September 30, 2026, one customer accounted for over 10% of our accounts receivable, all of which is current.
4 of 4 excerpts located in the filing text
Segments
| Segment | Revenue | Operating Income | Revenue Change | Commentary |
|---|---|---|---|---|
| Automotive segment | $25.2B | +2.0% | Management attributes the automotive sales revenue decline 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, offset by currency effects and higher FSD (Supervised) subscription revenue; total automotive gross margin rose to 18.5% from 17.0%. | |
| Energy generation and storage segment | $2.9B | -15.6% | Management attributes the revenue decrease primarily to tariff refunds for certain Megapack customers, a lower average selling price per Megapack unit, a decrease in Powerwall deployments, and a decrease in solar retrofit cash deployments, partially offset by an increase in Megapack deployments; segment gross margin rose to 33.1% from 31.4%. |
Balance Sheet & Liquidity
Leverage: Identified debt as of 2026-09-30 (carrying amount): long-term debt including current maturities of $8.0B. Not separately reported in this filing's standardized data: short-term borrowings. Total debt, net debt and debt-to-equity are therefore not stated.
Liquidity: Cash and cash equivalents of $17,853M plus short-term investments of $27,594M totaled $45,447M, up $1,388M from $44,059M at December 31, 2025. Tesla had $30.00B of unused committed amounts under its senior unsecured credit facilities as of September 30, 2026. Management states it believes current and potential sources of funding will provide adequate liquidity during the 12-month period following September 30, 2026.
Working capital: Current assets $70.4B vs. current liabilities $40.5B (current ratio 1.74x). Prior reported balance sheet as of 2025-12-31: $68.6B vs. $31.7B (2.16x).
Maturities & covenants
- In September 2026, Tesla entered into a $20.00B senior unsecured delayed draw term loan facility maturing September 2029, with undrawn commitments automatically reducing to $10.00B at 12 months, $5.00B at 15 months and zero at 18 months after closing.
- In September 2026, Tesla entered into two senior unsecured revolving credit facilities with aggregate commitments of $10.00B: an $8.00B 5-year facility maturing September 2031 and a $2.00B 364-day facility maturing September 2027, replacing the prior $5.00B RCF Credit Agreement.
- Non-recourse debt includes $5,966M under the China Working Capital Facility with contractual maturities October 2026-September 2027, classified long-term as Tesla has the intent and ability to refinance on a long-term basis.
- As of September 30, 2026, Tesla was in material compliance with all financial debt covenants.
Notable Footnotes
| Item | Impact |
|---|---|
| SpaceX equity investment | Tesla holds a $2,865M Level I fair-value investment in SpaceX recorded in Other non-current assets, with a $142M loss in Q3 2026 and an $863M gain for the nine months recorded in Other (expense) income, net; shares remain subject to sales restrictions expiring December 2026. |
| SI hardware company acquisition | In Q2 2026 Tesla acquired a Super Intelligence hardware company for $1.95B in common stock and equity awards, of which $1.73B is subject to service and performance conditions; no stock-based compensation expense was recognized as the performance conditions were determined to be improbable. |
| Warranty reserve | Accrued warranty rose to $10,138M from $8,607M at December 31, 2025, including $1,514M of net changes in liability for pre-existing warranties for the nine months. |
| Deferred revenue | Deferred revenue related to internet connectivity, FSD (Supervised) features and related programs was $4.08B at September 30, 2026 versus $3.87B at December 31, 2025; energy deferred revenue from customer prepayments was $3.30B versus $2.04B. |
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