Tesla, Inc. Common Stock 2026 Q3 Earnings Call

Good afternoon, everyone, and welcome to Tesla's third quarter 2026 Q&A webcast. My name is Travis Axelrod, Head of Investor Relations, and I am joined today by Elon Musk, Vaibhav Taneja, and a number of other executives. Our Q3 results were announced at about 3:00 P.M. Central Time. In the update deck, we publish at the same link as this webcast. During this call, we will discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in our most recent filings with the SEC. During the question and answer portion of today's call, please limit yourself to one question and one follow-up. Please use the raise hand button to join the question queue. Before we jump into Q&A, Elon has some opening remarks.

Elon? Thank you. The third quarter was very strong, and I would like to give a big congratulations to the whole Tesla team for working hard to make it happen.

Demand is growing rapidly for our vehicles. It is exceeding our production by a significant margin. Obviously, we are going to be ramping, and we are ramping production meaningfully. The biggest driver for demand is Full Self-Driving. Today, there is really no competitor for FSD in any car that you can buy. To be clear, we are producing and delivering as many cars as we can, and we are pushing very hard for FSD approval in additional markets. We are now approved in many countries in Europe, and we are hoping for an EU-wide approval. It is hard to predict, but maybe within a few months, but I would be surprised if it takes longer than Q1.

Obviously, that is not a timeframe we control, but we do anticipate being fully approved throughout Europe and many other countries. We also began production of the Tesla Semi Truck in Q3. And did the new Roadster demo, which was, I think, one of the most exciting events, arguably the coolest demo of any product ever. That is a testament to amazing work by the Tesla and SpaceX teams. We have also been laying the groundwork for a lot more manufacturing capacity. We are, I think, aiming for 5 million vehicles a year by approximately 2030. I think we have got a good shot of achieving that goal. Energy demand is very strong. We are actually almost sold out of all Megapacks for 2027, and we are ramping production as quickly as possible to meet demand. We also expect gross margins on that to increase meaningfully.

In a nutshell, after many years of grind and things being fairly flat, I think we are now headed for a lot of fun and significant growth. Regarding Robotaxi, we are seeing the Robotaxi miles driven or fully autonomous miles driven scale exponentially, meaning scaling very rapidly. It would be hard to overstate at this point, it really is an extremely fast week-over-week growth in autonomous miles. I do not think there is any company in the world that can match our scale with autonomous vehicles as we continue to ramp. The Cybercab fleet in Austin, for example, has grown by a factor of 10 since launch about a month ago. The cumulative mileage is really. When I look at the weekly chart, it is wow. It looks like a rocket going to orbit, basically. It is growing very fast.

I recommend if you want to try it out, come into Austin and you'll see Cybercabs in use at scale in Austin. As I think a lot of people saw with the Austin City Limits concert recently. This is really going to a very good place. Regarding Optimus, we've started what I'd call early production on our high-volume line in Fremont. I want to elaborate on this point because I have said this before, that the growth of Optimus, it's an S curve, but the initial part of the S curve has a shallow slope and is somewhat bumpy because it is such a radically new product. The way to think about it is there's 10,000 things that have to go right for production of the robot, and it'll move as fast as the slowest, least lucky of the 10,000.

We do have the vast majority of a million unit per line production line landed in Fremont right now. I would expect that it takes us probably at least a year, maybe a little longer, to get to that annualized rate, to get to 20,000 units a week. This is just fundamentally because there's still parts of the design that are changing. A lot of people ask me about Optimus. That's why I think I've got to sort of belabor this point, because if people don't understand new technology that well or volume production of complex new hardware that well, it sort of seems like, well, can't you just make a whole bunch of these things immediately and send them out?

It's like, no, you've got to basically build up an entire gigantic global supply chain and have domestically a very big factory, and everything's got to work. There's still some things we need to tweak about the design because you need to deliver a robot that is safe and reliable and has long duration. It can't wear out after a month. There's still quite a lot of work to do with regard to the AI and the robot for it to be truly useful for open-ended tasks. Like I said, I would expect that the AI, the electromechanical design, and the reliability and usage duration, the usage life of the robot, I do expect these issues to be solved around the end of next year. That's the time to expect when we're delivering Optimus to companies outside of Tesla.

I remain convinced that Optimus will be the biggest product on Earth, and humanoid robots in general will be the biggest product on Earth. Optimus is a very big deal. I do want to temper expectations that we still have a lot to get through, and it's about a year or so that it'll take us to get through all that stuff. To the best of my knowledge, there is no one that is even close to Tesla with respect to a general-purpose humanoid robot. Regarding the Terafab, the Austin-based research fab is progressing quickly. We'll begin commissioning machinery in the first half of next year, and hopefully, if things go well, we'll make our first test chip just to see if we can make any chip at all around May or June. That's pretty exciting. Our aspiration is to be making some kind of useful chip at volume around Q3 of 2028.

As I've said publicly on X, the Terafab I think will be the most valuable building in the world and will probably have an economic value that will place it in the top 20 of countries. So it's an epic project. This will be an incredibly important asset, if not a necessary asset, in order to scale, especially Optimus, as we can address bottlenecks in semiconductors, whether it's memory, packaging, logic, or whatever the case may be. With regard to a potential merger with SpaceX, I think I said everything that should be said yesterday, tap dancing through a minefield there. That's it. In conclusion, we're super excited about our autonomy and robotics roadmap.

There's a lot of incredibly awesome stuff coming, and I'd like to once again thank the Tesla team for their strong execution and all of our supporters for joining us on this journey.

Great. Thanks very much, Elon. Vaibhav has opening remarks as well.

Vaibhav. Thanks, Travis. We continued our progress on a lot of fronts in Q3.

Elon already covered a lot of them. Additionally, which I like to add is we also started deliveries of Megapacks with our in-house LFP batteries. For the first time, two consecutive quarters of vehicle deliveries of over 480K. On the automotive business, we exited the quarter with our highest backlog in four years, with deliveries constrained primarily by production. We are therefore focused on increasing production at all our factories to meet this growing demand. While we are actively working to increase production, it does take some time to get every aspect dialed in, from supply chain to manufacturing to delivery logistics. The Model Y continued to outperform in the quarter and set delivery records in several key markets.