Tesla Earnings Loom as Musk Endorses Possible Merger with SpaceX

Tesla will release earnings after Wednesday's market close, when CEO Elon Musk will discuss the results. SpaceX reported profit and revenue above expectations a day earlier. During SpaceX's late-Tuesday earnings call, Musk endorsed a possible merger with Tesla, which Musk also runs. Musk said the boards of both companies have established special committees to consider a merger. Analysts surveyed by LSEG expect Tesla's earnings per share to reach 43 cents. The analysts expect revenue of $27.9 billion.

Tesla would record a small revenue decline from $28.1 billion a year earlier unless revenue exceeds expectations. Tesla achieved double-digit revenue growth in the preceding two quarters. However, Tesla's revenue declined in three of the four quarters of 2025 as China's EV manufacturers, including BYD and Xiaomi, attracted buyers in Asia and Europe with affordable, innovative vehicles. The expiration of a federal EV tax credit also hurt Tesla last year. Earlier this month, Tesla reported third-quarter deliveries of 486,532 vehicles, about 2% below the year-earlier total. Deliveries provide Tesla's nearest measure of sales, although Tesla's shareholder communications do not precisely define the metric.

Vehicle sales still generate most of Tesla's revenue. However, Musk views robotaxis and humanoid robots as Tesla's future. A previous forecast put Tesla's capital expenditures above $25 billion this year, compared with about $8.5 billion in 2025. Tesla is building a semiconductor factory with SpaceX and Intel in Grimes County, Texas. The SpaceX partnership and overlapping activities, including work on Tesla's recently announced Roadster refresh, intensified speculation about an imminent merger.

Musk described navigating the merger question by saying, "I feel like I'm tap dancing through a minefield." Musk said combining the companies would be a good idea but would depend on shareholder support. Musk said approval would require votes representing 50% of all Tesla shares, a threshold Musk described as difficult to meet. Musk identified AI software, chip design, Terafab and robotics as potential areas for cooperation. Tesla already uses SpaceX-developed Grok AI for assistants in customers' cars and to help operate Optimus humanoid robots under development.

Tesla shares remain down 14% this year despite a Wednesday rally, trailing every megacap technology peer. SpaceX went public in June, and SpaceX shares trade above the $150 IPO price following a rise after earnings.

Tesla CFO Vaibhav Taneja said during July's earnings call that higher interest rates and energy costs had pressured automotive margins this year. Taneja also highlighted increasing revenue from Full Self-Driving (Supervised), or FSD. Tesla charges $99 per month for the partially automated driving system. FSD does not make Tesla vehicles safe to operate without a human driver. Tesla sells the system in Europe under the name Assisted Driving. Taneja said paid FSD customers worldwide numbered close to 1.5 million at the end of June.

Investors submitted questions online before Wednesday's call. One highly supported question sought an FSD update and a timeline for unsupervised operation that would make customers' vehicles fully automated and safe for robotaxi use. Shareholders also sought progress on Cybercab, Tesla's bronze, two-seat vehicle designed as a robotaxi. Tesla has not yet sold Cybercab to individuals. Tesla is testing Cybercab. Tesla has also deployed driverless vehicles in a limited U.S. fleet. However, Tesla remains well behind Alphabet's Waymo in the United States and Baidu's Apollo Go in China.