Tesla will aim to sell 5 million vehicles a year by the end of the decade as Elon Musk sharply lowers his ambitions for the electric vehicle business and the carmaker prepares for a possible merger with SpaceX.
The target is far from the chief executive’s original aspirations for annual sales of 20 million vehicles, which he first laid out in 2020 and quietly dropped in recent years – and aligns with his strategic pivot away from cars to robotics and AI.
“I think we’ve got a good shot of achieving” the 5 million vehicle goal by 2030, Musk said at an earnings presentation on Wednesday, adding that the company was adding more manufacturing capacity. Tesla last year delivered 1.6 million vehicles.
The company reported that adjusted net income fell 4 per cent from a year earlier to $1.7 billion (€1.51 billion) in the third quarter compared with the year before, slightly above Wall Street’s expectations for $1.6 billion. Its shares fell 3 per cent in after-hours trading.
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Tesla has suffered from a drop in electric vehicle sales in the latest quarter as higher demand in Europe, driven by petrol prices, failed to compensate for the loss of EV incentives in the US under president Donald Trump. Revenue was flat at $28 billion, in line with analysts’ estimates.
It earlier disclosed it delivered 486,532 vehicles in the third quarter, beating analysts’ forecasts but was 2 per cent fewer than in the same period last year.
The result came after Musk on Tuesday announced Tesla and his rocket company SpaceX had set up special committees to explore a mega-merger between the two groups with sprawling businesses from rockets, satellites, social media, robots and cars.
Musk, who called the combination “a good idea” on Tuesday, deflected further questions from analysts.
There has long been speculation of his ambitions for a merger. Last week, he unveiled a “flying” sports car called Roadster, which performed backflips and jumps using cold-gas thrusters developed by SpaceX.
The two companies also announced a joint venture earlier this year to build a huge “Terafab” in Austin, Texas, costing tens of billions of dollars to produce chips for Musk’s autonomous vehicles, robots and orbital AI data centres.
Tesla retired its X SUV and S luxury sedan models in January to focus on AI-powered humanoid “Optimus” robots, self-driving golden “Cybercabs” and an electric “Semi” truck.
Musk said he expected to start delivering Optimus to companies outside of Tesla from the end of next year but cautioned that scaling would take time.
Tesla will also aim to deliver Cybercabs to customers by the end of 2026, but the company has thus far only managed a limited robotaxi experiment in a few cities in Texas and California.
The proportion of new Teslas sold in North America with the company’s supervised version of the Full Self-Driving software reached more than 75 per cent, boosting revenues.
Capital expenditure more than doubled to $4.7 billion in the quarter but came in much lower than expectations of $7.9 billion and $1 billion less than the previous quarter.
Finance chief Vaibhav Taneja said the company was cutting its annual capex guidance to about $20 billion from an earlier $25 billion by managing its capital more efficiently.
Musk has said spending needs to drastically increase to compete with its Big Tech rivals that are forecast to spend trillions of dollars on AI in the coming years. Those vast investment needs have also fuelled speculation of a merger with SpaceX.
Dan Levy, analyst at Barclays, said in a note: “While some questions remain on Tesla’s capex, which is tracking well below guidance, nevertheless Tesla’s AI growth initiatives remain intact.”
GAAP (generally accepted accounting principles) net income, which includes stock-based compensation and swings in Tesla’s investments in crypto and SpaceX, was 44 per cent lower at $787 million.
Its automotive profit margin, excluding regulatory credits, improved to 18 per cent while its cost of goods sold fell from last quarter, suggesting an improvement in core profitability.
Coupled with a reduction of capital expenditure for the quarter, that helped Tesla to report free cash flow of more than $1.5 billion, far above Wall Street expectations of a cash burn of more than $4 billion.
Earlier in the week, the company released its proxy statement in advance of its annual meeting on December 3rd. The document revealed that after a fierce, years-long battle over a Delaware court’s decision to rescind a $56 billion 2018 stock award, Musk’s ultimate victory on appeal left him in control of 19.8 per cent of the company’s shares.
The proxy also showed he is yet to achieve any of the milestones in a new historic $1 trillion pay package. Musk needs to increase Tesla’s market value to $2 trillion and hit one of a number of other financial and sales objectives to unlock the first tranche of the stock award, but the shares have fallen 18 per cent this year to give it a value of $1.45 trillion. Copyright The Financial Times Limited 2026
