Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q.

Overview

Our mission is to accelerate the world’s transition to sustainable energy. We design, develop, manufacture, lease and sell high-performance fully electric vehicles, solar energy generation systems and energy storage products. We also offer ride-hailing, maintenance, installation, operation, charging, insurance, financial and other services related to our products. Additionally, we are increasingly focused on products and services based on AI, robotics and automation.

As a result of rapidly evolving trade and fiscal policy, uncertainty in the automotive and energy markets continues to increase, posing risks to our global supply chain and cost structure which could have a meaningfully adverse impact on demand for our products and our profitability. The current tariff regime will have a relatively larger impact on our energy generation and storage business compared to our automotive business. While we prepare for near-term challenges to our business under current policies, we are focused on long-term growth opportunities as we continue to make prudent investments.

In 2025, we produced approximately 1,220,000 consumer vehicles and delivered approximately 1,218,000 consumer vehicles through the third quarter. We are focused on profitable growth via a differentiated and efficiently managed product portfolio that leverages our existing factories and production lines, further improving and deploying our FSD (Supervised) capabilities, including future autonomous capabilities through our purpose-built Robotaxi product, Cybercab, reducing costs, increasing vehicle production, utilized capacity and delivery capabilities, improving and developing our vehicles, battery and AI compute technologies, vertically integrating and localizing our supply chain, and expanding our global infrastructure, including our service and charging infrastructure. We have continued to expand and refine our Robotaxi service after its June 2025 launch, capitalizing on our AI investments and scalable mobility infrastructure to advance a service-driven business model.

In 2025, we deployed 32.5 GWh of energy storage products through the third quarter. We are focused on ramping the production, increasing the market penetration of our energy storage products, developing our battery technologies and vertically integrating, localizing and expanding our supply chain.

During the three and nine months ended September 30, 2025, we recognized total revenues of $28.10 billion and $69.93 billion, respectively, representing an increase of $2.91 billion and a decrease of $2.06 billion, respectively, compared to the same periods in the prior year. During the three and nine months ended September 30, 2025, our net income attributable to common stockholders was $1.37 billion and $2.95 billion, respectively, representing decreases of $800 million and $2.01 billion, respectively, compared to the same periods in the prior year. We continue to ramp production and build and optimize our manufacturing capacity, expand our operations while focusing on further cost reductions and operational efficiencies to enable increased deliveries and deployments of our products, and invest in research and development to accelerate our AI, software and fleet-based profits for further revenue growth.

We ended the third quarter of 2025 with $41.65 billion in cash and cash equivalents and investments, representing an increase of $5.08 billion from the end of 2024. Our cash flows provided by operating activities were $10.93 billion during the nine months ended September 30, 2025, compared to $10.11 billion during the same period ended September 30, 2024, representing an increase of $825 million. Capital expenditures amounted to $6.13 billion during the nine months ended September 30, 2025, compared to $8.56 billion during the same period ended September 30, 2024, representing a decrease of $2.43 billion. Overall growth has allowed our business to generally fund itself, and we will continue to make critical high-value investments while maintaining a strong balance sheet.

Management Opportunities, Challenges and Uncertainties and 2025 Outlook

Automotive and AI Enabled Products—Production

The following is a summary of the status of production of each of our announced vehicle models in production and under development, as of the date of this Quarterly Report on Form 10-Q:

Production Location						Vehicle Model(s)						Production Status
Fremont Factory						Model S / Model X						Active
						Model 3 / Model Y						Active
Gigafactory Shanghai						Model 3 / Model Y						Active
Gigafactory Berlin-Brandenburg						Model Y						Active
Gigafactory Texas						Model Y						Active
						Cybertruck						Active
						Cybercab						Construction
Gigafactory Nevada						Tesla Semi						Construction
TBD						Roadster						In development

We are focused on growing and optimizing our manufacturing capacity, which includes capacity for manufacturing newer vehicle models and future vehicles utilizing aspects of our next generation platform, while maximizing production rate and efficiency at our Gigafactories. In the third quarter, we launched several new vehicle options across multiple geographies as we aim to increase utilization of our manufacturing footprint and expand our addressable markets, including the Model YL, Model Y Performance and Model 3 and Model Y Standard. The next phase of production growth will be initiated by advances in autonomy and the introduction of new products, including those built on our next generation vehicle platform, as well as our ability to manufacture our own cells that we are developing to have high-volume output, lower capital and production costs and longer range. Our goals are to improve vehicle performance, decrease production costs and increase affordability and customer awareness. We are also capitalizing on our strengths in real-world AI data to advance the development of Optimus, a general purpose, autonomous humanoid robot.

These plans are subject to uncertainties inherent in establishing and ramping manufacturing operations, which may be exacerbated by new product and manufacturing technologies we introduce, the number of concurrent international projects, any industry-wide component constraints, labor shortages and any future impact from events outside of our control. For example, changes to fiscal and trade policy with respect to tariffs, export controls and other restrictions may impact our global supply chain cost structure and availability, affecting not only vehicle production, but also facility expansions. Moreover, we have set ambitious technological targets with our plans for battery cells as well as for iterative manufacturing and design improvements for our vehicles.

Automotive and AI Enabled Products—Demand, Sales, Deliveries and Infrastructure

Our cost reduction efforts, cost innovation strategies, and additional localized procurement and manufacturing are key to our vehicles’ affordability and have allowed us to competitively price our vehicles. We will also continue to generate demand by improving our vehicles’ performance and functionality, including through product offerings and features utilizing artificial intelligence such as Autopilot, FSD (Supervised), and other software, and delivering new vehicles and vehicle options. In addition, we believe the launch of our Robotaxi service unlocks the potential for significant business growth to advance a service-driven business model. We will continue to improve safety and profitability while scaling the network. In addition, we have been increasing awareness, and expanding our vehicle financing programs, including attractive leasing terms for our customers.

However, we operate in a cyclical industry that is sensitive to shifting consumer trends, political and regulatory uncertainty, including with respect to trade and the environment, all of which can be compounded by inflationary pressures, rising energy prices, interest rate fluctuations and the liquidity of enterprise customers. For example, as inflationary pressures increased across the markets in which we operate, central banks in developed countries raised interest rates rapidly and substantially, which impacted the affordability of vehicle lease and finance arrangements. Further, sales of vehicles in the automotive industry also tend to be cyclical in many markets, which may expose us to increased volatility as we expand and adjust our operations. Moreover, as additional competitors enter the marketplace and help bring the world closer to sustainable transportation, we will have to adjust and continue to execute well to maintain our momentum. Additionally, our suppliers’ liquidity and allocation plans may be affected by current challenges in the automotive industry, which could reduce our access to components or result in unfavorable changes to cost. These macroeconomic and industry trends have had, and will likely continue to have, an impact on the pricing of, and order rate for our vehicles, and in turn our operating margin.

Changes in government and economic policies, incentives or tariffs may also impact our production, cost structure and the competitive landscape. While the final scope and application of recently announced changes in trade policy remain uncertain at this time, higher tariffs on imports and subsequent retaliatory tariffs could adversely impact consumer spending and demand for durable goods and related services. Furthermore, certain provisions of the OBBBA, including the removal of tax credits for electric vehicles, may also impact consumer demand for electric vehicles in general. We will continue to adjust accordingly to such developments, and we believe our ongoing cost reduction efforts, including through production innovation, process improvements and logistics optimization, and focus on operating leverage, vertical integration and supply chain localization will continue to benefit us in relation to our competitors. Our new products, which include more affordable options, and our advances in autonomy, position us for future growth.

As our production increases, we must work constantly to similarly increase vehicle delivery capability so that it does not become a bottleneck on our total deliveries. As we expand our manufacturing operations globally, we will also have to continue to increase and staff our delivery, servicing and charging infrastructure accordingly, maintain our vehicle reliability and optimize our Supercharger locations to ensure cost effectiveness and customer satisfaction. In particular, as other automotive manufacturers have announced their adoption of the North American Charging Standard (“NACS”) and agreements with us to utilize our Superchargers, we must correspondingly expand our network in order to ensure adequate availability to meet customer demands. We also remain focused on continued enhancements of the capability and efficiency of our servicing operations. In tandem with the launch of our Robotaxi business, we are focused on developing and optimizing dedicated infrastructure, including in relation to vehicle cleaning and maintenance, charging, security, teleoperations and fleet management, to ensure service quality as we continue to scale.

Energy Generation and Storage Demand, Production and Deployment

The long-term success of this business is dependent upon incremental volume growth. We continue to increase the production and capabilities of our energy storage products to meet high levels of demand, including the ramps of our Megafactories in Shanghai and Lathrop, California, and the construction of a new Megafactory near Houston, Texas. In the third quarter, we launched Megapack 3 and Megablock, our next-generation industrial storage product. For Megapack, energy storage deployments can vary meaningfully quarter to quarter depending on the timing of specific project milestones and logistics. As these product lines grow, we will have to maintain adequate battery cell supply for our energy storage products. At the same time, changes in government and economic incentives or tariffs may also impact our sales, cost structure and the competitive landscape. For instance, import tariffs by the US government and the provisions of the OBBBA could significantly increase battery cell expenses and impact costs for our consumers, negatively impacting consumer demand. Despite these challenges, as AI infrastructure drives rapid load growth, we see opportunities for our energy storage products to stabilize the grid, shift energy when it is needed most and provide additional power capacity.

Cash Flow and Capital Expenditure Trends

Our capital expenditures are typically difficult to project beyond the short-term given the number and breadth of our core projects at any given time, and may further be impacted by uncertainties in future global market conditions and shifting global trade and fiscal policy. We are simultaneously developing and ramping new products, building or ramping manufacturing facilities on three continents, piloting the development and manufacture of new battery cell technologies, expanding our Supercharger network and investing in autonomy and other artificial intelligence enabled training and products, and the pace of our capital spend may vary depending on overall priority among projects, the pace at which we meet milestones, production adjustments to and among our various products, increased capital efficiencies and the addition of new projects. While we prepare for near-term challenges to our business under current policies, we are focused on long-term growth opportunities as we continue to make critical, high-value investments while maintaining a strong balance sheet. Owing and subject to the foregoing as well as the pipeline of announced projects under development, all other continuing infrastructure growth and varying levels of inflation, we currently expect our capital expenditures to be approximately $9.00 billion in 2025. Changes in fiscal and trade policy may necessitate adjustments to our project timelines, potentially impacting our cash flow and capital expenditure expectations.

Our business has generally been consistently generating cash flow from operations in excess of our level of capital spend, and with better working capital management resulting in shorter days sales outstanding than days payable outstanding, our sales growth is also generally facilitating positive cash generation. We have and will continue to utilize such cash flows, among other things, to invest in autonomy, further vertically integrate our supply chain, expand our product roadmap and provide financing options to our customers. At the same time, we are likely to see heightened levels of capital expenditures during certain periods depending on the specific pace of our capital-intensive projects and other potential variables such as rising material prices and increases in supply chain and labor expenses resulting from changes in global trade conditions and labor availability. Overall, we expect our ability to be self-funding to continue as long as macroeconomic factors support current trends in our sales*.*

Critical Accounting Policies and Estimates

For a description of our critical accounting policies and estimates, refer to Part II, Item 7, Critical Accounting Policies and Estimates in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for the year ended December 31, 2024.

Recent Accounting Pronouncements

See Note 1, Summary of Significant Accounting Policies, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Results of Operations

Revenues

			Three Months Ended September 30,												Change												Nine Months Ended September 30,												Change
(Dollars in millions)			2025						2024						$						%						2025						2024						$						%
Automotive sales			$	20,359					$	18,831					$	1,528					8		%				$	49,071					$	53,821					$	(4,750)					(9)		%
Automotive regulatory credits			417						739						(322)						(44)		%				1,451						2,071						(620)						(30)		%
Automotive leasing			429						446						(17)						(4)		%				1,311						1,380						(69)						(5)		%
Total automotive revenues			21,205						20,016						1,189						6		%				51,833						57,272						(5,439)						(9)		%
Services and other			3,475						2,790						685						25		%				9,159						7,686						1,473						19		%
Total automotive & services and other segment revenue			24,680						22,806						1,874						8		%				60,992						64,958						(3,966)						(6)		%
Energy generation and storage segment revenue			3,415						2,376						1,039						44		%				8,934						7,025						1,909						27		%
Total revenues			$	28,095					$	25,182					$	2,913					12		%				$	69,926					$	71,983					$	(2,057)					(3)		%

Automotive & Services and Other Segment

Automotive sales revenue increased $1.53 billion, or 8%, in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, due to an increase of approximately 46,000 combined Model 3 and Model Y cash deliveries, partially offset by a decrease of approximately 8,000 deliveries of other models and a decrease in one-time FSD recognition as we had recognized $326 million of FSD revenue for Cybertruck and certain features such as Actually Smart Summon in the third quarter of 2024.

Automotive sales revenue decreased $4.75 billion, or 9%, in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, due to a decrease of approximately 24,000 deliveries of other models and a decrease of approximately 49,000 combined Model 3 and Model Y cash deliveries in part from bringing down all of our vehicle factories simultaneously for the changeover to New Model Y. Additionally, there was a decrease in one-time FSD recognition compared to the prior period and a lower average selling price per unit driven by sales mix and higher customer incentives such as attractive financing options.

Automotive regulatory credits revenue decreased $322 million, or 44%, in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. Automotive regulatory credits revenue decreased $620 million, or 30%, in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. Fluctuations in automotive regulatory credits are impacted by our supply of credits, subject to changes in regulation, production and sales. Furthermore, we are impacted by the demand for credits by other automobile manufacturers.

Services and other revenue increased $685 million, or 25%, in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to increases in used vehicle sales volume, paid Supercharging sessions, non-warranty maintenance services and collision revenue and insurance business revenue.

Services and other revenue increased $1.47 billion, or 19%, in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to increases in paid Supercharging sessions, non-warranty maintenance services and collision revenue, used vehicle sales volume and insurance business revenue.

Energy Generation and Storage Segment

Energy generation and storage revenue increased $1.04 billion, or 44%, in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. Energy generation and storage revenue increased $1.91 billion, or 27%, in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. The increases were primarily due to increases in Megapack and Powerwall deployments compared to the prior periods, partially offset by a decrease in average selling price of Megapack.

Cost of Revenues and Gross Margin

			Three Months Ended September 30,												Change												Nine Months Ended September 30,												Change
(Dollars in millions)			2025						2024						$						%						2025						2024						$						%
Cost of revenues
Automotive sales			$	17,365					$	15,743					$	1,622					10		%				$	42,393					$	45,602					$	(3,209)					(7)		%
Automotive leasing			225						247						(22)						(9)		%				692						761						(69)						(9)		%
Total automotive cost of revenues			17,590						15,990						1,600						10		%				43,085						46,363						(3,278)						(7)		%
Services and other			3,109						2,544						565						22		%				8,526						7,192						1,334						19		%
Total automotive & services and other segment cost of revenues			20,699						18,534						2,165						12		%				51,611						53,555						(1,944)						(4)		%
Energy generation and storage segment			2,342						1,651						691						42		%				6,230						5,157						1,073						21		%
Total cost of revenues			$	23,041					$	20,185					$	2,856					14		%				$	57,841					$	58,712					$	(871)					(1)		%
Gross profit total automotive			$	3,615					$	4,026																	$	8,748					$	10,909
Gross margin total automotive			17.0		%				20.1		%																16.9		%				19.0		%
Gross profit total automotive & services and other segment			$	3,981					$	4,272																	$	9,381					$	11,403
Gross margin total automotive & services and other segment			16.1		%				18.7		%																15.4		%				17.6		%
Gross profit energy generation and storage segment			$	1,073					$	725																	$	2,704					$	1,868
Gross margin energy generation and storage segment			31.4		%				30.5		%																30.3		%				26.6		%
Total gross profit			$	5,054					$	4,997																	$	12,085					$	13,271
Total gross margin			18.0		%				19.8		%																17.3		%				18.4		%

Automotive & Services and Other Segment

Cost of automotive sales revenue increased $1.62 billion, or 10%, in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due a net increase in deliveries year over year as discussed above and a higher average cost per unit due to lower fixed cost absorption, an increase in tariffs and sales mix, partially offset by lower material costs.

Cost of automotive sales revenue decreased $3.21 billion, or 7%, in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, due to the decreases in deliveries year over year as discussed above and lower average cost per unit due to sales mix and lower material costs, partially offset by lower fixed cost absorption and an increase in tariffs compared to the prior period.

Cost of services and other revenue increased $565 million, or 22%, in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to increases in used vehicle sales volume, cost of paid Supercharging revenue, and cost of non-warranty maintenance services and collision revenue.

Cost of services and other revenue increased $1.33 billion, or 19%, in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to increases in used vehicle sales volume and cost, cost of paid Supercharging sessions, and cost related to our insurance business.

Gross margin for total automotive decreased from 20.1% to 17.0% in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. Gross margin for total automotive decreased from 19.0% to 16.9% in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. The decreases were primarily due to the changes in automotive sales revenue and cost of automotive sales revenue, as discussed above, as well as decreases in regulatory credits revenue.

Gross margin for total automotive & services and other segment decreased from 18.7% to 16.1% in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. Gross margin for total automotive & services and other segment decreased from 17.6% to 15.4% in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. The changes in gross margin were primarily due to the automotive gross margin factors discussed above, partially offset by an improvement in services and other margins.

Energy Generation and Storage Segment

Cost of energy generation and storage revenue increased $691 million, or 42%, in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to an increase in Megapack and Powerwall deployments compared to the prior period, partially offset by a decrease in average cost per unit for Megapack from lower raw material costs, lower manufacturing costs for Megapack in part from the ramp of Shanghai Megafactory, partially offset by higher tariffs.

Cost of energy generation and storage revenue increased $1.07 billion, or 21%, in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily from increases in Megapack and Powerwall deployments compared to the prior period, partially offset by a decrease in average cost per unit for Megapack and Powerwall primarily from lower raw material costs, lower manufacturing costs for Megapack in part from the ramp of Shanghai Megafactory, partially offset by higher tariffs.

Gross margin for energy generation and storage increased from 30.5% to 31.4% in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. Gross margin for energy generation and storage increased from 26.6% to 30.3% in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. The increases were primarily due to the changes in energy generation and storage revenue and cost of energy generation and storage revenue, as discussed above.

Research and Development Expense

			Three Months Ended September 30,												Change												Nine Months Ended September 30,												Change
(Dollars in millions)			2025						2024						$						%						2025						2024						$						%
Research and development			$	1,630					$	1,039					$	591					57		%				$	4,628					$	3,264					$	1,364					42		%
As a percentage of revenues			6		%				4		%																7		%				5		%

Research and development (“R&D”) expenses increased $591 million, or 57%, in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. R&D expenses increased $1.36 billion, or 42%, in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. These increases were primarily due to increases in costs related to AI and other programs as we continue to expand our product roadmap and technologies. Additionally, there were increases in stock-based compensation of $145 million and $338 million in the three and nine months ended September 30, 2025 as compared to the prior periods, respectively.

R&D expenses as a percentage of revenue increased from 4% to 6% in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to higher R&D expenses, partially offset by an increase in total revenues in the current period. R&D expenses as a percentage of revenue increased from 5% to 7% in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to higher R&D expenses and a decrease in total revenues in the current period.

Selling, General and Administrative Expense

			Three Months Ended September 30,												Change												Nine Months Ended September 30,												Change
(Dollars in millions)			2025						2024						$						%						2025						2024						$						%
Selling, general and administrative			$	1,562					$	1,186					$	376					32		%				$	4,179					$	3,837					$	342					9		%
As a percentage of revenues			6		%				5		%																6		%				5		%

Selling, general and administrative (“SG&A”) expenses increased $376 million, or 32%, in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, driven by a $168 million increase in operating expenses including legal charges, a $151 million increase in employee and labor costs, including professional services, a $38 million increase in stock-based compensation and a $25 million increase in marketing expenses.

SG&A expenses increased $342 million, or 9%, in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, driven by a $237 million increase in operating expenses including legal charges, a $126 million increase in employee and labor costs, including professional services, a $52 million increase in stock-based compensation, partially offset by an $82 million decrease in facilities related expenses.

Restructuring and Other

			Three Months Ended September 30,												Change												Nine Months Ended September 30,												Change
(Dollars in millions)			2025						2024						$						%						2025						2024						$						%
Restructuring and other			$	238					$	55					$	183					333		%				$	332					$	677					$	(345)					(51)		%

In the third quarter of 2025, we initiated certain actions in order to reduce costs and improve efficiency through convergence of AI chip design efforts. As a result, we recognized $238 million of expenses, within our automotive segment, related to charges for supercomputer assets, contract terminations and employee terminations.

In the second quarter of 2024, we initiated and substantially completed certain restructuring actions to reduce costs and improve efficiency. As a result, we recognized $583 million of employee termination expenses in Restructuring and other in our consolidated statement of operations.

Interest Income

			Three Months Ended September 30,												Change												Nine Months Ended September 30,												Change
(Dollars in millions)			2025						2024						$						%						2025						2024						$						%
Interest income			$	439					$	429					$	10					2		%				$	1,231					$	1,127					$	104					9		%

Interest income increased $10 million, or 2%, in the three months ended September 30, 2025 and increased $104 million, or 9%, in the nine months ended September 30, 2025 as compared to the three and nine months ended September 30, 2024, respectively. The increases were primarily due to higher interest earned on our cash and cash equivalents and short-term investments compared to the prior period due to increases in our average portfolio balance, partially offset by lower average interest rates.

Other (Expense) Income, Net

			Three Months Ended September 30,												Change												Nine Months Ended September 30,												Change
(Dollars in millions)			2025						2024						$						%						2025						2024						$						%
Other (expense) income, net			$	(28)					$	(263)					$	235					(89)		%				$	173					$	100					$	73					73		%

Other (expense) income, net, changed favorably by $235 million in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. Other (expense) income, net, changed favorably by $73 million in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. The changes are primarily due to fluctuations in foreign currency exchange rates on our intercompany balances and mark-to-market on our bitcoin digital assets. As our intercompany balances are significant in nature and we do not typically hedge foreign currency risk, we can experience significant fluctuations in foreign currency exchange rate gains and losses from period to period.

Provision for Income Taxes

			Three Months Ended September 30,												Change												Nine Months Ended September 30,												Change
(Dollars in millions)			2025						2024						$						%						2025						2024						$						%
Provision for income taxes			$	570					$	602					$	(32)					(5)		%				$	1,098					$	1,456					$	(358)					(25)		%
Effective tax rate			29		%				22		%																27		%				23		%

Our provision for income taxes decreased by $32 million in the three months ended September 30, 2025 and decreased by $358 million in the nine months ended September 30, 2025 as compared to the three and nine months ended September 30, 2024, respectively, primarily due to the change in our pre-tax income year over year, offset by changes in forecasted annual effective tax rate. Our effective tax rate increased from 22% to 29% in the three months ended September 30, 2025 and increased from 23% to 27% in the nine months ended September 30, 2025 as compared to the three and nine months ended September 30, 2024, respectively, primarily due to changes in the mix of our jurisdictional earnings, a decrease in foreign income deductions resulting from lower taxable income attributable to the OBBBA and the remeasurement of our deferred tax assets related to net controlled foreign corporation tested income (“NCTI”) under the OBBBA.

See Note 9, Income Taxes, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details.

Liquidity and Capital Resources

We expect to continue to generate net positive operating cash flow. The cash we generate from our core operations enables us to fund ongoing operations and production, our research and development projects for new products and technologies including our proprietary battery cells, additional manufacturing ramps at existing manufacturing facilities, the construction of future factories, and the continued expansion of our retail and service locations, body shops, Mobile Service fleet, Supercharger, energy product installation capabilities and autonomy and other artificial intelligence enabled products.

In addition, because a large portion of our future expenditures will be to fund our growth, we expect that if needed we will be able to adjust our capital and operating expenditures by operating segment. For example, if our near-term manufacturing operations decrease in scale or ramp more slowly than expected, including due to global economic, tax, trade or business conditions, we may choose to correspondingly slow the pace of our capital expenditures. Finally, we continually evaluate our cash needs and may decide it is best to raise additional capital or seek alternative financing sources to fund the rapid growth of our business, including through drawdowns on existing or new debt facilities or financing funds. Conversely, we may also from time to time determine that it is in our best interests to voluntarily repay certain indebtedness early.

Accordingly, we believe that our current sources of funds will provide us with adequate liquidity during the 12-month period following September 30, 2025, as well as in the long-term.

See the sections below for more details regarding the material requirements for cash in our business and our sources of liquidity to meet such needs.

Material Cash Requirements

From time to time in the ordinary course of business, we enter into agreements with vendors for the purchase of components and raw materials to be used in the manufacture of our products. However, due to contractual terms, variability in the precise growth curves of our development and production ramps, and opportunities to renegotiate pricing, we generally do not have binding and enforceable purchase orders under such contracts beyond the short-term, and the timing and magnitude of purchase orders beyond such period is difficult to accurately project.

As discussed in and subject to the considerations referenced in Part I, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations—Management Opportunities, Challenges and Uncertainties and 2025 Outlook—Cash Flow and Capital Expenditure Trends in this Quarterly Report on Form 10-Q, we currently expect our capital expenditures to be approximately $9.00 billion in 2025. Changes in trade policy may necessitate adjustments to our project timelines, potentially impacting our capital expenditure expectations.

As of September 30, 2025, we and our subsidiaries had outstanding $7.49 billion in aggregate principal amount of indebtedness, of which $1.86 billion is current. For details regarding our indebtedness, refer to Note 7, Debt, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Sources and Conditions of Liquidity

Our sources to fund our material cash requirements are predominantly from our deliveries and servicing of new and used vehicles, deployments and servicing of our energy storage products, interest income, and proceeds from debt facilities and equity offerings, when applicable.

As of September 30, 2025, we had $18.29 billion and $23.36 billion of cash and cash equivalents and short-term investments, respectively. Balances held in foreign currencies had a U.S. dollar equivalent of $4.29 billion and consisted primarily of euros and Chinese yuan. We had $7.39 billion of unused committed credit amounts as of September 30, 2025. For details regarding our indebtedness, refer to Note 7, Debt, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

We continue adapting our strategy to meet our liquidity and risk objectives, such as investing in U.S. government securities and other investments, investing in autonomy, further vertically integrating our supply chain, expanding our product roadmap and providing financing options to our customers.

Summary of Cash Flows

			Nine Months Ended September 30,
(Dollars in millions)			2025						2024
Net cash provided by operating activities			$	10,934					$	10,109
Net cash used in investing activities			$	(8,950)					$	(11,184)
Net cash provided by financing activities			$	429					$	2,868

Cash Flows from Operating Activities

Net cash provided by operating activities increased by $825 million to $10.93 billion during the nine months ended September 30, 2025 from $10.11 billion during the nine months ended September 30, 2024. This increase was primarily due to favorable changes in net operating assets and liabilities of $1.81 billion, partially offset by a decrease in net income excluding non-cash expenses, gains and losses of $980 million.

Cash Flows from Investing Activities

Net cash flows from investing activities and their variability across each period related primarily to capital expenditures, which were $6.13 billion and $8.56 billion for the nine months ended September 30, 2025 and 2024, respectively, mainly for AI-related capital expenditures, global factory expansion, machinery and equipment as we expand and enhance our product roadmap. We also purchased $2.82 billion and $2.62 billion of short-term investments, net of proceeds from maturities and sales, for the nine months ended September 30, 2025 and 2024, respectively.

Cash Flows from Financing Activities

Net cash flows from financing activities decreased by $2.44 billion to $429 million during the nine months ended September 30, 2025 from $2.87 billion during the nine months ended September 30, 2024. The decrease was primarily due to a $3.02 billion increase in repayments of debt and a $128 million decrease in proceeds from issuances of debt. See Note 7, Debt, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details regarding our debt obligations. Additionally, the decrease was partially offset by an increase of $252 million in proceeds from exercises of stock options and other stock issuances, a $206 million decrease in principal payments on finance leases, a $124 million decrease in payments for buy-outs of noncontrolling interests in subsidiaries and $101 million of proceeds received from directors in shareholder settlement net of payment for related legal fees during the nine months ended September 30, 2025.