Tesla's net profit drops 43% in Q3
What's the story
Tesla has reported a major decline in its net profit for the third quarter of 2026. The company's net profit fell to $787 million, down 43% year-on-year. This comes despite revenue of $28 billion in Q3, nearly unchanged from last year. However, Tesla's automotive revenues saw a slight decrease of 3% year-on-year to $20.6 billion.
Revenue drop
Revenue from solar panels and storage batteries suffers major hit
Tesla's revenue from solar panels and storage batteries also suffered a major hit in Q3. The segment, which had been witnessing growth, saw a 16% year-on-year decline to $2.9 billion.
However, the company's services and other revenues, including parts sales and Supercharger usage fees, grew by a third to $4.6 billion during the same period.
Cost increase
Operating margin drops to just 2.6%
Tesla's operating expenses surged by 39% to $4.8 billion, bringing down the company's operating margin to just 2.6%.
This is a significant drop from the 5.8% margin recorded in Q3 2025.
The company also saw its capital expenditures increase by 110% to $4.7 billion, while free cash flow plummeted by 62% to $1.5 billion during this period.
Credit decline
Tesla's regulatory credit sales plummet
Tesla's dependence on selling regulatory credits to other automakers has also reduced significantly.
The company earned just $113 million from this source in the latest quarter, down from $417 million in Q3 2025.
This decline is largely due to the fact that almost all other automakers now have their own electric vehicle lineups and no longer need Tesla's credits for emission offsetting.