Tesla reported a 3% drop in revenue to $24.9bn ($24.5bn expected). Within that, the core auto business saw an 11% drop, offset by strong growth in Energy Storage (+25%) and Services (+18%).
Operating profit fell 11% to $1.4bn ($1.1bn expected), driven by a 39% increase in costs as the business invests for growth.
Over the quarter, Tesla produced 434,358 vehicles, down 5% and delivered 418,227, down 16%.
Free cash flow fell 30% to $1.4bn, and net cash, including leases, was $35.7bn at the end of the quarter.
Tesla expects to double its capital expenditure in 2026 to fund several projects, including the Cybercab, Tesla Semi, and Megapack 3, which remain on track for volume production in 2026. Tesla Model S and X are being discontinued, with factory space shifting to Optimus production.
The shares were up 2.8% in pre-market trading.
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