Tesla slips as group sets lower annual sales goal amid SpaceX merger talk

Investing.com – Tesla shares dropped in premarket trading on Thursday, with the company setting a lower annual sales target as CEO Elon Musk focuses on robotics and artificial intelligence, while investors kept tabs on a potential blockbuster merger with SpaceX.

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Speaking to investors, Musk largely reiterated that robotics, autonomous driving and the Terrafab chipmaking venture would be Tesla’s next major sources of growth. Against this backdrop, Tesla is now aiming to sell 5 million vehicles by the end of the decade, compared to Musk’s original projections of 20 million.

Yet Musk stated that he wanted to “temper expectations” for the company’s Optimus humanoid robot, adding that there was “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.” Tesla is hoping to start shipping Optimus robots to corporate customers by the end of 2027, Musk said.

On the company’s Robotaxi venture, Musk said it was unlikely that the service would “move the needle this quarter” with regards to earnings, and that it could become a noticeable revenue driver in the second quarter of 2027.

“We don’t believe Robotaxi will be financially material until late 2027 or 2028, but progress can be positive for sentiment,” analysts at UBS said in a note.

Musk also flagged steep capital requirements for Tesla’s chipmaking ambitions, chiefly the Terafab venture with SpaceX. He said the venture — through which Tesla plans to begin manufacturing its own, in-house AI chips — would probably cost “north of $100 billion” in the long term.

Net profit dropped by 4% to $1.7 billion, hit by a $142 million mark-to-market loss on Tesla’s SpaceX holdings. On an adjusted basis, earnings per share stood at $0.48. Revenue was flat at $28.05 billion.

Analysts had expected a profit of $0.45 per share on revenue of $27.92 billion.

Tesla’s quarterly automotive gross margin excluding regulatory credit sales improved to 18.1% from 15.4% a year ago and from 16.3% in the prior quarter.

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The results also come as Tesla has been investing heavily to support Musk’s strategic pivot for the company away from cars to AI and robotics. Still, Tesla predicted that it would end up spending around $20 billion in capital expenditures this year, compared to a prior estimate of $25 billion.

Tesla swung back to positive free cash flow of $1.53 billion in the third quarter, after having reported negative free cash flow for the first time in two years in the prior period.

Earlier this month, Tesla posted better-than-expected quarterly deliveries, helped by a recovery in sales in Europe following a slump in that region a year ago. The European demand helped offset softness in the EV maker’s two biggest markets, the U.S. and China.

Last week, the company also unveiled an updated Roadster model with limited flight capacity using SpaceX technology, although the vehicle was only set for production in 2028. The Roadster event last week showed off the vehicle’s capability for limited flight using pressurized air, working on the same technology that SpaceX uses in some of its rocket ships.

Investors have also been closely eyeing the possibility of a merger with SpaceX, in what would be a move by Musk to consolidate his corporate empire.

On Tuesday, Musk said Tesla and SpaceX had each formed special committees to explore a potential merger, saying there was “a lot of merit” to a possible tie-up between the world’s biggest rocket launcher and satellite operator and the second-largest EV maker. However, he cautioned that there was “no guarantee” a deal would eventually be reached.

Musk declined to comment on the matter in Tesla’s post-earnings call, saying he was “tap dancing through a minefield there.”

Tesla stock has lagged its Magnificent Seven peers in 2026, being the only member to have fallen so far this year. Shares of Tesla are down 14.1% so far this year, compared to gains of as high as 26.6% for the other six companies that make up the high-profile club. The broader S&P 500 has also outperformed Tesla, climbing more than 13% year-to-date.

(Ambar Warrick and Scott Kanowsky contributed reporting)

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