Tesla Beats Earnings Estimates as Free Cash Flow Rebounds

Tesla reported stronger-than-expected adjusted earnings and positive free cash flow for the third quarter, according to its earnings results published on October 21, 2026. The electric vehicle manufacturer recorded $28.05 billion in revenue, $1.53 billion in free cash flow, and 1.74 million active Full Self-Driving subscriptions as it expanded investments in robotics, artificial intelligence, and new manufacturing projects.

According to Bloomberg consensus estimates cited by Yahoo Finance, Tesla's adjusted earnings per share reached $0.48, exceeding expectations of $0.44. Adjusted EBITDA totaled $3.90 billion, above the projected $3.66 billion, although revenue fell slightly short of the $28.13 billion consensus estimate.

Free cash flow substantially outperformed expectations, which had projected a negative $4.92 billion. Capital expenditures totaled $4.732 billion, compared with the estimated $7.96 billion, and Tesla shares rose in after-hours trading following the results, according to Yahoo Finance.

Tesla also reported 486,532 vehicle deliveries for the quarter, a 2% decline from the same period a year earlier but above Bloomberg's estimate of 463,000. Energy storage deployments increased to 13.7 GWh from 12.5 GWh a year earlier and 13.5 GWh in the second quarter.

The company's earnings release said its Optimus humanoid robot had entered production at the Fremont factory. Tesla acknowledged that further improvements to the robot and its manufacturing process remain necessary while asserting that its existing production approach is commercially viable.

"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 said in its earnings release.

Tesla's artificial intelligence expansion includes a target of reaching 400 MW of AI training computing capacity by the end of 2026. The company has also outlined more than $25 billion in capital expenditures for the year, compared with approximately $8.5 billion spent in 2025.

The planned spending covers Optimus production lines, AI computing infrastructure, the Cybercab production ramp, and Terafab, a chip manufacturing project Tesla is developing with SpaceX. The investment program comes as CEO Elon Musk has discussed the possibility of closer ties between his two companies.

During SpaceX's earnings call on Tuesday night, Musk confirmed that both companies had established special committees to consider a potential transaction. He said the committees were formed at shareholders' request and consist of independent directors, while noting that his involvement would create a conflict of interest.

"I think both SpaceX and Tesla have formed special committees to discuss this idea," Musk said during SpaceX's earnings call. "At the request of shareholders, and these special committees are consist of independent directors. And because I'm a conflicted party, I can't actually be in the discussions of the special committees."

Musk also cautioned against treating a potential merger as a settled outcome, although he expressed support for the idea. No completed merger was announced in the source reports.

"I don't think we should necessarily assume that I think some people out there assume that a SpaceX and Tesla merger is a certainty. And I think that would be overstating it. Do I think it would be a good idea? Yes," Musk said.

Tesla's vehicle sales also face differing conditions across major markets. According to Cox Automotive estimates cited by Yahoo Finance, the company sold approximately 144,100 electric vehicles in the United States during the third quarter, down nearly 20% year over year but representing about 54% of the domestic electric vehicle market.

The US market continued to reflect the expiration of the $7,500 federal electric vehicle tax credit, which had prompted increased purchases during the third quarter of the previous year. Meanwhile, an October 21 market update from Investor's Business Daily reported that the Nasdaq moved above its 50-day moving average, with SpaceX and Super Micro Computer among the stocks leading the advance as investors assessed major corporate earnings.