Investors will be paying close attention to Tesla’s third-quarter earnings call on Wednesday afternoon, after chief executive Elon Musk floated the idea of merging the car company with his rocket and AI company, SpaceX. On a call with SpaceX investors on Tuesday, Musk said: “There’s a lot of merit to combining the companies.”
Musk said that the board of directors for both of his businesses had put together special committees to explore the potential merger, but had not yet reached an agreement on the terms of the transaction. The move would require the approval of 50% of all Tesla shareholders.
Tesla reported better-than-expected third-quarter earnings on Wednesday, with a reported revenue of $28.05bn and $0.48 on earnings per share. That beat Wall Street’s projections of $27.9bn in revenue, with $0.43 on earnings per share. Still, the company came in at a slightly lower revenue than last quarter, which was $28.23bn. And its automotive revenue dropped 3% from the year prior.
“We maintained strong momentum on many projects spanning Super Intelligence (SI), robotics and renewable energy that will be critical to building a future of Amazing Abundance,” the company wrote in its report.
Despite the stronger-than-anticipated quarter, Tesla has experienced a rough year with falling stock and increased competition from cheaper Chinese automakers. The company’s share price has fallen by more than 11% this year, although it appears to have rebounded some since last week with the news of the possible SpaceX merger.
Last week, Musk unveiled the company’s electric sports car, the Roadster 2, which he said uses technology from SpaceX to “basically fly like a rocket”. At a demonstration at a SpaceX facility in Texas, a remote-controlled version of the car drove up a steeply curved ramp and then used jet-like thrusters to flip over, hover and land. The vehicle is priced at upwards of $200,000.
“Flying cars are real … it can basically fly like a rocket, it can do rolls, crazy gymnastics,” Musk said at the event, adding that “I’m not sure it’s necessarily legal in all jurisdictions.”
Tesla’s vehicle sales are not as crucial to its market performance as they once were, as the company has pivoted towards robotics, autonomous driving and AI. Tesla’s Optimus robot has faced production hurdles, however; and its driverless taxi service, Robotaxi, has hit road blocks in scaling its fleet and expanding to new cities.
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Musk has long declared the Robotaxi will have near-infinite demand and that “probably half the population of the US” would be using the autonomous ride-hailing service by the end of 2025. Similarly, the CEO has forecast the manufacture of as many as 1m Optimus robots each year. As is frequently the case with Musk’s promises, he has failed to reach those lofty targets and rollout has been slow.
“Tesla’s leaders continue to make big claims about autonomous mobility and physical AI. The company has achieved remarkable things but continues to miss some of its leaders’ bolder bets,” said Paul Miller, a principal analyst for market research firm Forrester. “Tesla robotaxis are undeniably carrying passengers, but not yet at anywhere near the levels the company promised.”
