Tesla Studies A Nice third Quarter, Robotaxi & FSD Lastly Taking Off

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I haven’t lined a Tesla earnings launch and name shortly, however I believed I’d give a fast abstract since this quarter was fairly attention-grabbing. Final quarter I wrote this after the supply launch, however I didn’t write up the earnings name.

Observations From The Shareholder Deck:

• Gross margin manner up, from 16.8% final quarter to 19.6%
• Working margin virtually doubled, from 1.4% to 2.6%
• Regulatory credit down from $146 million final quarter to $116 million, manner down from $417 million a yr in the past or a peak of $542 million in This fall 2025
• Tesla introduced it has the very best ever backlog for each passenger autos and power storage
• Mannequin Y capability in Austin grew from >250,000 to >375,000 (annual)
• Semi capability went from commissioning to 25,000 (annual)
• California Optimus manufacturing went from building to early ramp
• Cortex coaching compute went up a bit, from >205 MW to >225 MW, however the plan is to broaden to 400 MW by the tip of the yr (that isn’t a change)
• No change in battery cell manufacturing capability
• Texas Megapack capability went from commissioning to 50 GWh (barely larger than the 40 GWh of California and Shanghai)
• FSD connect price on new autos in North America jumped to 75%; lively subscriptions as much as 1.74 million from 1.48 million final quarter
• Unsupervised Robotaxi miles had been up dramatically from final quarter (wanting on the graph) — as much as about 1.7 million from 250,000. Additionally they introduced at present they’re as much as 3.3 million miles!
• Printed a brand new website to trace lots of info now we have needed for years!

Different highlights (AI generated):

• Income roughly flat at $28.05B (in step with consensus). Automotive income down ~3% YoY; Power Technology & Storage income down ~16% to ~$2.9B (partly tariff-related buyer refunds); Companies & Different up sharply to ~$4.6B.
• GAAP web earnings $787M (down 43% YoY); non-GAAP web earnings ~$1.7B / $0.48 EPS (beat consensus). Contains mark-to-market swings on Bitcoin and SpaceX holdings.
• Shock constructive free money movement of $1.53B (vs. expectations of a multi-billion-dollar burn). Capex got here in at $4.73B, effectively beneath the ~$7–8B many anticipated.
• Full-year capex steerage reduce to ~$20B (from the prior $25B+). Administration stated they’re managing capital deployment extra effectively and plan to fund most of it from working money movement.
• Battery availability (not demand) was the limiter on auto volumes. They nonetheless ended the quarter with the most important passenger-vehicle backlog in 4 years and the highest-ever energy-storage order price/backlog.
• Document quarterly deliveries in Canada, Australia, Japan, and Taiwan; document manufacturing at Gigafactory Berlin.
• Power storage deployments 13.7 GWh (+10% YoY). First Megapacks constructed totally with Tesla’s personal Nevada LFP cells had been shipped. Megafactory Texas is now in manufacturing (deliberate 50 GWh).
• Optimus: manufacturing has begun on high-volume strains in Fremont — “the primary production-quality bots” appropriate for a industrial product.
• Austin Fab (Terafab) building continues; gear commissioning deliberate for 2027.

Observations From The Name

• Manufacturing purpose of 5 million autos a yr by 2030 is new — sadly, final yr the purpose was a price of 5 million autos a yr by the tip of 2028.
• Elon expects the Megapack enterprise to broaden in quantity and margins as information middle demand accelerates.
• Tesla hopes to roll out Unsupervised FSD to customer-owned autos in Q2 of subsequent yr (in fact, the goal has slipped MANY occasions).
• Tesla hopes to promote Cybercabs to others by the tip of the yr.
• Mapping overhaul: huge AI-driven navigation/mapping enhancements coming within the subsequent few months; system learns each particular person person and fleet preferences.
• Cybercab manufacturing is scaling shortly, and the corporate claims that it’s simple to fabricate due to 50% fewer components.
• It appears Cybercabs can be restricted by laws within the US and around the globe.
• For years, the query all of us had was: “is Tesla ready to scale unsupervised as a result of the software program has to get higher or for the regulators to approve it?” It appears they’re pleased with the standard of the software program, however solely in geofenced areas (reverse of the longtime promise that it wouldn’t be geofenced). That is annoying to current house owners, however gained’t impression the power of Tesla to scale to many cities and generate vital income.
• An analyst requested if the worth of FSD could be pressured down as different corporations develop aggressive software program. Tesla executives claimed FSD is way harder to develop than most individuals assume. It’s simple to develop a demo that works 90% of the time, however it is extremely tough to resolve all the sting instances.

Different highlights (AI generated):

• Elon: the most important driver of auto demand proper now’s Full Self-Driving.
• Cybercab fleet in Austin has grown by an element of ~10 because the September 3 launch. Subsequent cities are being deliberate (Dallas talked about as an early candidate). Robotaxi income anticipated to turn into noticeable in 2027 and extra vital later that yr.
• Unsupervised FSD for customer-owned autos focused round Q2 2027 (Ashok). Cybercab buyer availability extra like 2027, however Elon emphasised it’s primarily transport-as-a-service quite than a automobile most individuals will personal.
• Optimus: count on it is going to take roughly a yr (possibly a bit extra) to succeed in an annualized price of ~1 million models (20,000/week). Preliminary prospects can be industrial; outdoors prospects extra like finish of 2027. Mood expectations — nonetheless lots of reliability, put on, and AI work remaining.
• Hoping for broader EU FSD approval within the subsequent few months or by Q1 (timeline not totally in Tesla’s management). 4 new EU nation approvals already since Q2; now reside in 9 EU international locations, with >100,000 prospects and >160 million km logged.
• Secured ~$30B of shorter-term debt capability to assist fund future capex if wanted. Capex will ramp extra meaningfully in 2027 and turn into “noticeable within the tens of billions” in 2028 (Optimus strains, AI compute, Cybercab, Terafab, and so on.).

Conclusion

There are lots of small items of excellent information. Tesla retains promising automobile development, however each quarter they produce about the identical variety of vehicles. This gave the impression to be the primary name the place they’re shortly scaling Robotaxi as a substitute of promising to try this sooner or later. It appeared to coincide with the Cybercab launch final month. Because the Mannequin Y has the identical pc and cameras, many individuals (together with me) thought they might scale the Mannequin Y Robotaxi service first, then deliver within the Cybercabs. It seems the software program received good at about the identical time as Cybercab manufacturing received going. I assume a contented coincidence.

On conventional automotive gross sales, they clearly have big demand (which could be very completely different than different automakers of battery electrical autos within the US), which is due to each FSD and excessive oil costs causes by each the Iran and Ukraine battle. They declare to be rising manufacturing in Austin and Berlin, nevertheless it doesn’t appear to be sufficient to cut back the backlog. Tesla may promote much more vehicles if they’d some stock. Many individuals can’t wait a very long time to get a brand new automotive, since they’re sometimes shopping for due to the tip of lease, an accident, or a breakdown of an current automotive. These individuals have to purchase a used Tesla (which is why this web page exhibits CarMax promoting a 2026 Mannequin Y with 6,000 miles for $4,000 greater than a brand new 2027 Mannequin!). You may get extra particulars right here on the CarMax website.

If you wish to make the most of my Tesla referral hyperlink to stand up three months Full Self Driving, right here’s the hyperlink: https://ts.la/paul92237 — but when one other proprietor helped you extra, please use their hyperlink as a substitute of mine. 

Disclosure: I’m a shareholder in Tesla [TSLA] and XPeng [XPEV]. However I supply no funding recommendation of any kind right here.