Oct 21 (Reuters) - Elon Musk's Tesla beat Wall Street estimates for third-quarter revenue on Wednesday as a rebound in vehicle deliveries and growth in its energy storage unit lifted sales, even as heavy spending on AI and robotaxis weighed on profit.
Its shares rose more than 1% in extended trading.
The Austin, Texas-based automaker reported revenue of $28.05 billion for the three months ended September 30, compared with analysts' average estimate of $27.88 billion, according to data compiled by LSEG.
Revenue was $28.10 billion in the year-earlier quarter.
Capital expenditure in the third quarter came in at $4.73 billion, compared with the expectation of about $7.5 billion. That compares with $5.79 billion in the second quarter and $2.25 billion a year earlier.
Free cash flow in the September quarter came in at $1.53 billion, compared with an expectation of cash burn of $4.92 billion.
Tesla delivered 486,532 vehicles in the third quarter, beating Wall Street expectations of about 461,100 vehicles. Deliveries were down about 2% from a year earlier.
Deliveries outpaced production of 464,391 vehicles by more than 22,000 for a second straight quarter, resulting in an inventory drawdown. Wall Street expects about 1.77 million for 2026, according to Visible Alpha data.
Model 3 and Model Y made up nearly all deliveries. Other models including the Cybertruck accounted for just 8,295, down from 12,364 deliveries in the second quarter. Tesla has stopped production of the Model S and Model X vehicles in Fremont and is replacing production lines with its first large-scale Optimus line.
Its core automotive business remains under scrutiny as rivals globally launch newer, often cheaper models, while Tesla leans heavily on the aging Model 3 and Model Y. It has said it passed 10 million vehicles delivered and that Model Y is on track to be the world's best-selling vehicle this year.
To stimulate demand, Tesla has offered stripped-down, cheaper versions of both models and launched a six-seater Model Y in the United States in July. However, US demand has been hit by the removal of tax credits last year.
Results come as Wall Street weighs a possible merger with SpaceX. The companies have formed special committees to discuss a deal, Musk said on Tuesday.
Investors have been keen to see clearer evidence that Musk's push into self-driving and robotics is moving from promise to commercial reality.
Tesla said earlier this month that its Cybercab fleet in Austin had grown from fewer than 40 vehicles to more than 300 in about a month, with Dallas next. It launched unsupervised robotaxi rides in Miami, Orlando and Tampa in July, after Dallas and Houston in April.
Tesla's energy unit has become a key counterweight to the auto business, helped by demand for grid-scale batteries from renewable-power developers and data centers. Tesla has said the current tariff regime will hit its energy business harder than its auto business.
Tesla won approval in April to deploy Full Self-Driving (Supervised) in the Netherlands, and some other European countries have since followed. A key vote on Europe-wide approval was expected later this year. The company agreed to change the name in Europe to Tesla Assisted Driving.
The company's shares have fallen about 14% this year. At roughly $1.4 trillion, it remains the world's most valuable automaker by a wide margin, reflecting investor expectations that self-driving software, energy storage, robotaxis and humanoid robots could eventually deliver higher-margin growth than vehicle sales.
(Reporting by Akash Sriram in Bengaluru; Editing by Pooja Desai)
