Tesla's profits are under pressure
Tesla reported a 56% year-over-year decline in operating income for the third quarter, citing increased AI and R&D expenses despite strong vehicle delivery numbers. Meanwhile, Elon Musk has indicated that Tesla and SpaceX are exploring a potential merger.
Why it matters
The financial results reflect the high costs of Tesla's pivot toward AI and autonomy, while the potential merger news signals a major shift in corporate strategy for Musk's companies.
Tesla's earnings call was on Wednesday, a day after Elon Musk said on SpaceX's earnings call that he'd back a merger. Bloomberg/Getty Images Tesla is facing some profitability headwinds. Its operating income fell 56% year over year as AI and research and development costs climbed. The company is still in the green, and it surprised earlier this month by delivering 486,532 vehicles in the third quarter. Tesla is still selling plenty of cars . Making the same amount of money on them is getting harder. On Wednesday, the Elon Musk-led automaker reported that its operating income fell 56% year over year to $718 million in the third quarter — below Wall Street's estimates of $746.3 million — while revenue was roughly flat at $28.05 billion. Tesla pointed to higher operating expenses tied to its AI efforts, or "SI"/"Super Intelligence" as Trump prefers , and other R&D projects.
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