THE 10-SECOND VERSION (AI SUMMARY)
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What happened: Tesla’s car and energy revenue fell last quarter, but its software and services business grew 33%.
Why it matters: As cars become software, buyers are splitting into two camps: people who want simple and people who want the newest.
What to do: Know which kind of customer is in front of you, and sell to what they actually value.
Old-timer wisdom once said, “If you can’t fix it, you don’t really own it.” Cars left that zone a long time ago. Now the question is more like, “If you miss a payment and it goes away, did you ever really own it?”
Some people will always want a simple car they understand, the way some of us squeeze every last moment out of our phones. (I still have an iPhone 11.) Others will always want the newest advances and innovations. As cars become more software-based, that divide is going to get sharper, and in the long run, that’s good for marketing.
Tesla’s latest earnings show just how far one company has leaned into the second camp. We dug into the numbers on today’s episode of the Automotive State of the Union.
The more a car becomes software, the more buyers will choose between simple and cutting-edge.
Tesla’s Q3 Earnings: Where the Money Is Moving
Tesla’s third-quarter revenue was flat at $28 billion, according to The Wall Street Journal, but the mix underneath it is shifting.
Shrinking | Growing |
|---|---|
Automotive revenue, down 3% | “Services and other,” including FSD subscriptions and Robotaxi, up 33% |
Energy storage revenue, down 16% | Paid FSD subscriptions, up from 1 million to 1.7 million in a year |
Vehicle deliveries, down 2% to 486,532 | A record 75% of deliveries included a paid FSD subscription |
“People are buying FSD with a car attached, not the other way around.” Elon Musk, on X
Musk also said Tesla could start shipping its Optimus humanoid robots to outside companies by the end of next year, starting with heavy industry and dangerous tasks. Early production has begun in Fremont, California. And he expects Tesla’s two-seat Cybercab to reach private and commercial customers by the end of this year, though he said “the vast majority” will be Tesla-owned.
What Tesla’s Software Shift Means for Dealers
Tesla has found a way to keep earning from customers long after the sale, through subscriptions that renew every month. That’s a very different business than selling a car and hoping the customer returns for service.
For dealers, the bigger takeaway is the split Tesla is highlighting. Some customers want every new feature and will happily pay monthly for it. Others want a dependable vehicle they understand and can keep for years. Both are real markets, and both deserve a sales experience built for them.
Know whether your customer wants the newest thing or the simplest thing, and sell them that.
Hear the full conversation on today’s episode of the Automotive State of the Union.
