Tesla reported flat revenue in the third quarter but a surprise positive free cash flow despite its heavy investments on AI and robotics, all while talk of a merger with SpaceX raises questions about the future of the electric carmaker.
Tesla generated free cash flow of $1.5 billion in the quarter, while analysts expected the company's cash burn to expand to $4.3 billion, according to estimates compiled by FactSet.
Wall Street expected capital expenditures to accelerate from last quarter's $5.8 billion, but they declined to $4.7 billion -- still more than twice the company's spend a year earlier.
Tesla sold 486,532 electric vehicles globally in the third quarter, a 2% dip from the same period last year. Most of Tesla's revenue comes from selling EVs, although with the discontinuation of the Model S and Model X and slow Cybertruck demand, the Model Y SUV and Model 3 sedan make up the vast majority of sales.
EV demand in the U.S. cratered following the end of incentive credits last year, leading Tesla to recapture most of the American EV market. The Model Y remains far and away the U.S.'s bestselling EV.
Last week, Chief Executive Musk and other executives showed off the redesigned Tesla Roadster, expected to be a higher-end, limited-edition sports car slated for sale in 2028.
This quarter, however, it is SpaceX that dominates the conversation around Tesla.
A merger between the two Musk-led companies "would be a good idea," Musk said on Tuesday's SpaceX earnings call. Musk, who is chief executive of both companies, added that the two have formed "special committees" dedicated to studying a merger prospect.
Musk said he is not on either committee, and that shareholders will ultimately decide upon any merger. But a deal would likely give Musk increased control over a combined company.
Shares of SpaceX were up 7% midday Tuesday.