Tesla profits plunge 29 percent to $787 million as robot spending surges
Tesla just reported net income dropped to $787 million as spending surged on AI.
The short version
- Automotive revenue fell 3% to $20.56 billion in the quarter.
- Capital expenditures more than doubled from a year earlier to $3.73 billion.
Tesla reported third-quarter results that beat estimates even as automotive revenue dropped 3% to $20.56 billion, according to CNBC. Net income plummeted 29% to $787 million, or 22 cents a share, from $1.11 billion a year earlier. The drop in profitability reflects a massive surge in spending on Optimus humanoid robots and artificial intelligence initiatives.
Capital expenditures more than doubled from a year earlier to $3.73 billion, while free cash flow plunged by 62% to $1.53 billion. Tesla, the electric vehicle maker run by Elon Musk, blamed lackluster automotive revenue on lower average sales prices and trouble securing battery supplies.
Active subscriptions for its FSD Supervised driving system, which costs $99 per month in the U.S., increased 67% from a year earlier to 1.74 million. Ashok Elluswamy, Tesla's vice president of Autopilot, said the company plans to give some customer cars access to its forthcoming unsupervised systems around the second quarter of next year.
The earnings report also lands as special committees discuss a possible tie-up between Tesla and SpaceX, the rocket company founded by Musk. Musk told investors on a quarterly call that it would be a good idea for his two companies to merge, though he warned he feels like he is tap dancing through a minefield.
The company's stock slid more than 3% in extended trading following the report. For your portfolio or your business planning, heavy spending on future tech can pinch cash flow today even when sales look strong.
