For some time, Elon Musk has described Tesla as an artificial intelligence (AI) and robotics company focused on autonomy, rather than a traditional car manufacturer. Its latest earnings call made that vision clear, with Musk spending much of the discussion on robots, robotaxis, and AI.
But the biggest question hanging over Tesla was about something outside its core business: whether it could merge with SpaceX.
Musk addressed the possibility briefly during Tesla's third-quarter earnings call on Wednesday, saying he had already discussed it during SpaceX's earnings call the previous day.
During that earlier call, Musk said a merger would be a “good idea” and confirmed that both companies had formed special committees to explore the proposal. However, he stressed that no agreement had been reached and that a deal was far from guaranteed.
The comments come as Tesla tries to balance a challenging financial quarter with its growing investment in AI, robotics and autonomous driving.
Ogbonda Chivumnovu
A mixed quarter for Tesla
Tesla reported $28.05 billion in revenue for the third quarter, slightly below the $28.13 billion analysts expected. Automotive revenue fell 3% year over year to $20.56 billion, while energy generation and storage revenue declined 16% to $2.88 billion.
Net income dropped 44% to $787 million, or 22 cents per share, from $1.37 billion a year earlier. Capital expenditure nearly doubled to $4.73 billion as Tesla continued investing in infrastructure and new technologies.
There was, however, a bright spot. Free cash flow reached $1.53 billion, recovering from a $1.09 billion outflow in the previous quarter. The company also lowered its full-year capital expenditure forecast from $25 billion to $20 billion, suggesting that some planned investments are taking longer to roll out than previously expected.
Tesla attributed production constraints partly to battery availability, which continued to limit its ability to increase vehicle output. Meanwhile, its spending on AI infrastructure and robotics shows how much the company is investing in businesses it hopes will eventually become major sources of growth.
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Tesla's future increasingly depends on whether it can turn its autonomous driving technology and robots into commercially successful products.
Its Full Self-Driving (Supervised) software continued to attract customers. Tesla said the feature was included with 75% of vehicles sold in North America during the quarter. However, the system still requires active driver supervision and does not make the vehicles fully autonomous.
The company is also expanding its Robotaxi service. Tesla began deploying Cybercabs into its Austin fleet during the quarter, and cumulative unsupervised Robotaxi miles grew eightfold compared with the previous quarter.
Musk expects the service to become a more meaningful contributor to Tesla's finances in 2027, with a potentially bigger impact in the second half of the year. That timeline depends on Tesla expanding its fleet and addressing the operational and regulatory challenges involved in running a driverless transport service.
Robotics is another major part of the plan. Tesla says production of its Optimus humanoid robots has begun on its Fremont factory lines. But scaling production will take time, as the company continues refining the hardware and manufacturing process.
For now, these projects require substantial investment. Their long-term value will depend on whether Tesla can move from early deployments to reliable products that customers and businesses are willing to pay for at scale.
Why Musk wants to merge Tesla with SpaceX
The potential merger would bring together two companies pursuing increasingly connected ambitions in AI, computing and robotics.
SpaceX has expanded beyond rocket launches into satellite connectivity and AI infrastructure, while Tesla is developing autonomous vehicles, humanoid robots and its own computing hardware. Musk has argued that combining their capabilities could accelerate work on AI software, chip design, robotics and connectivity.
The companies are also pursuing a joint semiconductor manufacturing initiative known as Terafab, which is intended to support their growing computing needs.
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