Tesla profits fall on higher spending as 'Elon Inc.' talk builds

NEW YORK, Oct 22: Tesla reported lower third-quarter profits Wednesday as near-trillionaireElon Musk's electric vehicle maker ramped up huge investments in artificial intelligence and other envelope-pushing technologies.

Besides marginally lower car sales, Tesla saw a drop in revenues from regulatory credits and energy and storage, while spending on research and development more than doubled as the company engages in a spending binge on AI, robotics and autonomous transport.

The earnings were arguably upstaged by Musk's disclosure Tuesday that special committees of independent directors at both SpaceX and Tesla have been set up to discuss a merger of the two companies. Musk, who leads both companies, declined to offer further details Wednesday.

The potential merger -- which some have dubbed "Elon Inc." -- boosted shares of both companies on Wednesday, lifting Musk's wealth back near $1 trillion at $989 billion, according to Forbes' real-time billionaires index.

In the third quarter, Tesla reported profits of $787 million, down 42.7 percent from the year-ago period. Revenues were essentially flat at $28 billion. Analysts had been cautious about Tesla's latest results heading into Wednesday's release.

While third-quarter auto sales topped estimates, due in part to an uptick in European markets amid high gasoline prices, better sales have not always translated to Tesla's bottom line.

The company has faced questions about the rollout of Tesla's robotaxi venture that has progressed much more slowly than hoped.

Musk has repeatedly made overly rosy forecasts about self-driving technology, as in 2019 when he predicted there would be more than a million robotaxis the following year.

In Texas, where Tesla has focused its robotaxi launch, there are currently about 800 robotaxis, according to FSD Database.

Tesla's release highlighted the September 3 launch of robotaxi service in Austin and said "cumulative unsupervised Robotaxi miles grew eightfold quarter over quarter."

Company officials said Wednesday that if the current pace of robotaxi growth continues, the venture could be meaningful financially as early as next year. The ramp-up is guided by a strong desire to avoid safety problems, company officials said.

For much of this year, Tesla has also encountered scrutiny over swelling capital spending to fund ambitious programs in artificial intelligence, robotics and autonomous driving.

Capital spending more than doubled in the third quarter to $4.7 billion, but the company lowered its capital spending plans compared with earlier in the year.

Chief Financial Officer VaibhavTaneja, who in July had projected 2026 spending of more than $25 billion, said Wednesday the company expects to spend $20 billion, adding that the company managed "our capital deployment efficiently." �" AFP