Good morning, TSLAblog.com readers. Aimee Joiner here, ready to dissect the latest from Tesla, where ambition clashes with reality and innovation battles supply chain woes.

Cybercab's Cautious Climb & Robotaxi's Night Vision Quest

Tesla's highly anticipated Cybercab service launched commercially in Austin, Texas, in September 2026, but its initial deployment has been notably limited. Only 45 Cybercabs were approved for the road at launch, increasing to 169 by early October BigGo Finance. This fleet size is a mere fraction of Waymo's U.S. operations, which boast over 4,000 vehicles BigGo Finance. Public records indicate Tesla has a total of 420 autonomous vehicles approved in Texas, with the majority—approximately 375—being converted Model Y vehicles rather than the purpose-built Cybercabs BigGo Finance. Early reports from Austin suggest the Cybercab fleet has already encountered navigation challenges in the city's complex downtown areas and unpredictable traffic The Tech Buzz.

Amidst the slow rollout, Elon Musk addressed one of the key hurdles for expanding Robotaxi operations to 24/7 service: nighttime driving. He stated that the primary focus is "making sure that we don’t run over pets when they’re hard to see at night," specifically citing the extreme edge case of "grey kittens on grey tarmac in the dark" Not a Tesla App. This comes as Robotaxi operating hours were recently extended from 10 PM to 11 PM in Austin Business Insider. Tesla's manuals acknowledge that low light conditions can limit camera accuracy Business Insider, but Musk maintains that AI-assisted camera processing can overcome these limitations Business Insider. The NHTSA is currently investigating Tesla's camera system for FSD's ability to detect hazards in low-visibility conditions Business Insider.

AI Chip Memory Slashed as Supply Shortage Bites

In a significant development, Elon Musk announced that Tesla is reducing the memory capacity of its next-generation in-house AI chips, AI5 and AI6, due to a prolonged memory semiconductor supply shortage. The AI5 chip's low-power DRAM (LPDDR) has been cut to 72 gigabytes (GB), half of its original plan, while the AI6 will see its memory adjusted to 144GB, a one-third reduction Chosun.com. Musk stated this was "the only way to secure sufficient production volume for Optimus," Tesla’s humanoid robot Chosun.com. These AI chips are critical for enhancing autonomous driving and robot perception capabilities Chosun.com. The memory crunch is affecting the broader industry, with NVIDIA also reportedly considering reducing the memory capacity of its upcoming Rubin Ultra AI chip from 1 terabyte (TB) to as low as 192GB Chosun.com.

Q3 Delivery Growth Slows, Q2 Profit Plunges

Tesla's Q3 2026 vehicle deliveries showed a modest sequential increase but a year-over-year decline. Deliveries grew 1.3% quarter-over-quarter, but dropped 2.1% compared to Q3 2025 Tesla Oracle. The company's energy business also experienced a slowdown during the quarter Tesla Oracle. This delivery performance follows a challenging Q2, where Tesla's operating profit plunged 57% year-over-year BigGo Finance. Despite the profit decline, Q2 revenue was reported at $28.24 billion, with a net profit of $1.11 billion The Globe and Mail. The company has announced the date and time for its Q3 2026 earnings call webcast Tesla Oracle, where further details on these trends are expected.

Market Watch

TSLA closed Friday, October 2, 2026, at $370.59, marking a strong gain of 4.65% from the prior day's close Investing.com. This rebound comes amidst mixed analyst sentiment. RBC Capital maintained a Buy rating on Tesla, setting a price target of $480.00 The Globe and Mail. Analyst Tom Narayan, who covers the Consumer Cyclical sector, holds an average return of 4.5% and a 44.62% success rate on recommended stocks The Globe and Mail. Ladenburg Thalmann & Co.’s Michael Legg also issued a Buy rating yesterday The Globe and Mail. However, J.P. Morgan maintained a Hold rating on TSLA today The Globe and Mail.