Tesla Q3 2026: flat revenue of $28.0B and a 2.6% operating margin, as R&D rose 69%

Tesla sells electric cars, Megapack and Powerwall batteries, and a growing set of services: Full Self-Driving (Supervised) subscriptions, Supercharging, insurance, repairs and, since September 3, Robotaxi rides in Austin using its Cybercab. Its quarterly update, filed as an 8-K exhibit, now opens with projects “spanning Super Intelligence (SI), robotics and renewable energy,” and the income statement shows the cost of them: research and development grew far faster than revenue.

The quarter’s tension is between the gross profit line and the line below it. Gross profit rose to $5,494 million from $5,054 million a year earlier, with a better automotive margin and record services profit. Operating expenses rose by about $1.35 billion (our arithmetic), three times the gross-profit gain, so operating income fell by more than half. Cash flow looked better than earnings, partly because of timing in working capital.

Tesla Q3 2026 results at a glance

$ millions, except per share and units	Q3 2026	Q2 2026	Q3 2025
Total revenues	28,046	28,236	28,095
Automotive	20,560	20,516	21,205
Energy generation and storage	2,881	3,139	3,415
Services and other	4,605	4,581	3,475
Gross profit	5,494	4,751	5,054
Operating expenses	4,776	4,353	3,430
Income from operations	718	398	1,624
Net income to common stockholders	787	1,114	1,373
Diluted EPS (GAAP)	$0.22	$0.32	$0.39
Diluted EPS (non-GAAP)	$0.48	$0.33	$0.50
Free cash flow	1,531	(1,092)	3,990
Deliveries (units)	486,532	480,126	497,099

Revenue was flat from a year earlier and from Q2. The update’s own bridge lists what moved it year over year: lower Energy Generation and Storage revenue (“partially due to tariff-related customer refunds”), a lower vehicle average selling price, lower regulatory credit revenue and fewer deliveries, offset by growth in Services and Other, higher automotive ancillary sales from more FSD subscriptions, and a $0.3 billion positive currency effect.

R&D rose 69% and took the operating margin to 2.6%

Research and development was $2,761 million, against $1,630 million a year earlier and $2,371 million in Q2, up about 69% year over year (our arithmetic). Selling, general and administrative expense rose about 29% to $2,015 million (our arithmetic). The update attributes the higher operating expenses to “SI and other R&D projects, SBC (including 2025 CEO Performance Award) and SG&A.” The year-ago base also included $238 million of restructuring and other charges, with none this quarter, so R&D and SG&A together grew by more than total operating expenses did.

Stock-based compensation was $1,165 million, against $663 million a year earlier. The 10-Q says $275 million of the quarter’s expense relates to the 2025 CEO Performance Award ($802 million for nine months), whose 20-million-vehicle delivery milestone Tesla considered probable as of September 30.

The result: income from operations of $718 million on $28.0 billion of revenue, an operating margin of about 2.6%, against 5.8% a year earlier (our arithmetic; the update shows the change as −322 bp). It was up from $398 million in Q2, when operating expenses were lower but gross profit was weaker too.

The car business held up, and services hit a record

Automotive revenue was $20,560 million, down about 3% from a year earlier (our arithmetic), on deliveries down 2% to 486,532. Production rose 4% to 464,391. Deliveries exceeded production, and new-vehicle days of supply fell to 11 from 15 in Q2.

GAAP automotive gross margin rose to 18.5% from 17.0% a year earlier and 16.9% in Q2. Excluding regulatory credits, which fell to $113 million from $417 million, it was 18.1% against 15.4%. In its year-over-year operating-income bridge, the update lists “improved vehicle region and product mix” and higher FSD-related ancillary sales as positives, partly offset by a lower average selling price. Active FSD subscriptions, a metric tied to the 2025 CEO Performance Award, reached 1.74 million from 1.04 million a year earlier.

Services and other gross profit grew $86 million from Q2 to a record $734 million, the update says. Energy was the weak segment: revenue fell about 16% to $2,881 million (our arithmetic) even though storage deployed rose to 13.7 GWh from 12.5 GWh. Its gross margin was about 33.1%, against 31.4% a year earlier (our arithmetic). The 10-Q shows $221 million of Q3 revenue from Megapack sales to SpaceX, whose chief executive is also Tesla’s.

Why non-GAAP EPS is more than double GAAP EPS

GAAP diluted EPS was $0.22; non-GAAP was $0.48. The difference is almost all stock-based compensation: $982 million after tax, $0.28 a share. The other adjustments roughly cancel: an unrealized gain on digital assets of $224 million after tax ($0.06) is subtracted, while the after-tax loss on the SpaceX stake ($108 million, $0.03) and certain tax items ($44 million, $0.01) are added back.

Tesla bought its SpaceX stake for $2,002 million in Q1 2026, and the 10-Q puts its fair value at $2,865 million at September 30, after a $142 million loss in Q3 and an $863 million gain for the nine months. With the SpaceX stake swinging from a $1,005 million pre-tax gain in Q2 to a $142 million loss in Q3, GAAP net income to common stockholders fell to $787 million from $1,114 million in Q2, despite higher operating income.

$1.5B of free cash flow, with help from payables

Operating cash flow was $6,263 million and capital expenditures $4,732 million, for free cash flow (Tesla’s definition: operating cash flow less capital expenditures) of $1,531 million, against $3,990 million a year earlier and −$1,092 million in Q2. Cash, cash equivalents and short-term investments rose by $1.9 billion to $45.4 billion.

Working capital did a good part of the work. Accounts payable, accrued and other liabilities added $3,991 million and deferred revenue $1,255 million, while prepaid expenses and other assets used $1,818 million, receivables $565 million and inventory $313 million. Net of all the working-capital lines, the contribution was about $2.6 billion of the $6.3 billion (our arithmetic); net income of $804 million plus non-cash items such as depreciation ($1,852 million) and stock compensation ($1,165 million) made up most of the rest. In the energy business, the 10-Q says deferred revenue from customer payments was $3.30 billion at September 30, against $2.04 billion at the end of 2025, “mainly due to contractual payment terms.” Payables and prepayments can reverse in a later quarter.

Capital expenditures were about 2.1 times the $2,248 million of a year earlier and about 17% of revenue (our arithmetic). Trailing-twelve-month capex was $15,407 million, against $8,914 million a year earlier. The outlook names the projects behind it: “SI compute, solar, battery material and semiconductor manufacturing.” The update itself gives no capex figure, but the 10-Q says Tesla expects 2026 capital expenditures “in excess of $20 billion,” driven by its SI initiatives, including compute infrastructure and data centers. Nine-month capex was $13,014 million, which would put Q4 at roughly $7 billion or more if that holds (our arithmetic).

What to watch in Q4

• Operating expenses. $4.8 billion this quarter, up 39% from a year earlier (our arithmetic). The update says spending on “SI, robotics and energy” continues; whether gross profit keeps pace decides the margin.
• Working capital and capex. Payables and deferred revenue added $5.2 billion gross, about $2.6 billion net of other working-capital lines (our arithmetic). A reversal, plus Q4 capex of roughly $7 billion or more on the 10-Q’s full-year expectation, would weigh on Q4 free cash flow.
• Energy. Storage deployed rose but revenue fell. The update describes its “highest-ever order rate and backlog,” and Megafactory Texas began production with planned capacity of 50 GWh.
• Battery supply. The update calls battery availability “the limiting factor in increasing auto volumes” in the quarter.
• Robotaxi. Cumulative unsupervised miles reached nearly two million, the update says, with Cybercab in the Austin fleet since September 3.

Quick answers

Did Tesla make a profit in Q3 2026?

Yes. Net income attributable to common stockholders was $787 million, or $0.22 per diluted share, down from $1,373 million ($0.39) a year earlier. Income from operations was $718 million, against $1,624 million. Non-GAAP EPS, which excludes stock-based compensation and some other items, was $0.48.

How many cars did Tesla deliver in Q3 2026?

Tesla delivered 486,532 vehicles, down 2% from 497,099 a year earlier, and produced 464,391, up 4%. Model 3 and Model Y made up 478,237 of the deliveries.

What is Tesla’s guidance for 2026?

The Q3 update gives no numeric guidance for revenue, deliveries or margins. The 10-Q says Tesla expects 2026 capital expenditures in excess of $20 billion. The update’s outlook says Tesla is focused on “maximum capacity utilization” at its factories and on maintaining liquidity to fund its product roadmap and capacity expansion.

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Sources and method. Every quarterly figure (the statement of operations, balance sheet and cash flows, the financial and operational summaries, the GAAP-to-non-GAAP reconciliations, the revenue and operating-income bridges, the outlook and the quoted text) comes from the Q3 2026 Update, Exhibit 99.1 to the Form 8-K filed 2026-10-21 (accession 0001628280-26-066738) for the quarter ended 2026-09-30, read directly from SEC EDGAR and linked above. The Q2 2026 and Q3 2025 comparatives are printed in the same exhibit. The filing was accepted at 4:41 pm ET on October 21, after the US market closed; the update scheduled its webcast for 4:30 p.m. CT the same day. The 2025 CEO Performance Award expense, the SpaceX equity investment, Megapack sales to SpaceX, energy deferred revenue and the 2026 capital-expenditure expectation come from the Form 10-Q filed 2026-10-22 (accession 0001628280-26-066775). The Form 8-K filed 2026-10-02 reported production and deliveries only and is not used.

No consensus estimate is included, so this piece makes no claim that the quarter beat or missed expectations; the update contains no numeric guidance for the quarter (the only numeric outlook in the filings is the 10-Q’s 2026 capex expectation), so the quarter is judged against prior periods. This piece makes no claim about the share-price reaction.

Our arithmetic, labelled as such: operating margins of 2.6% and 5.8%; the roughly $1.35 billion increase in operating expenses and their 39% growth; R&D up 69% and SG&A up 29%; automotive revenue down 3%; energy revenue down 16% and energy gross margins of 33.1% and 31.4%; capital expenditures at about 2.1 times the year-ago figure and 17% of revenue; operating income down more than half (from $1,624 million to $718 million, about 56%); opex at 87% of gross profit; the $5.2 billion contributed by payables and deferred revenue and the about $2.6 billion net working-capital contribution; nine-month capex of $13,014 million ($2,493 million + $5,789 million + $4,732 million) and the implied Q4 of roughly $7 billion or more; and the 44% decline in GAAP EPS. These are approximations built on the disclosed figures, not reported numbers. The −322 bp operating-margin change, the 2% and 4% delivery and production changes, the automotive gross margins and the $86 million services gross-profit increase are as printed in the update. The interpretation (that operating-expense growth, led by R&D, outran gross-profit growth, and that working capital gave free cash flow a large lift) is our analysis, not a company statement, and is not a forecast.

Related: SpaceX Q3 2026, the company Tesla holds a stake in and sells Megapacks to, and Enovix Q2 2026, another battery business we cover.