Tesla published its third-quarter 2026 financial results this afternoon. Earlier in October, it reported its sales and deliveries for the three-month period, selling fewer cars than in the same quarter in 2025, yet it still beat analyst projections. Now we can see how those sales translate to the bottom line. Tesla brought in $28 billion in revenue in Q3, almost the same as in 2025.
Automotive revenues were $20.6 billion, a 3 percent decrease year over year. Perhaps more troubling is the decline in revenue from solar panels and storage batteries—this line of business had been growing, but for Q3 revenue fell 16 percent year over year to $2.9 billion. Services and other revenues, though, which include parts and Supercharger use, grew by a third to $4.6 billion.
But the company—like the rest of us—has seen its expenses go up. Operating expenses rose by 39 percent to $4.8 billion, dropping the company’s operating margin to just 2.6 percent; in Q3 2025, Tesla’s margin was 5.8 percent. Net profit fell to $787 million, down 43 percent year over year. What’s more, capital expenditures were up by 110 percent to $4.7 billion, and free cash flow was down 62 percent to $1.5 billion.
Tesla can no longer rely on selling regulatory credits to other automakers: these fell to $113 million this quarter, down from $417 million in Q3 2025. Now, virtually every other automaker has a portfolio of electric vehicles and no longer needs to offset its emissions by pooling with Tesla. In the US, Tesla CEO Elon Musk’s support helped elect a president who has abolished such credits entirely, with Musk’s blessing.
Tesla’s letter to investors says its flat revenues were due to lower average selling prices, selling fewer cars, not receiving as much in credits, and also the decline of its energy storage business. Together with the reduced credits and battery and solar sales, a big jump in operating expenses is responsible for the diminishing profitability; some of this is Tesla spending rampantly on AI hardware, but some is also the CEO’s extravagant compensation package.
