Tesla achieved its highest quarterly revenue, yet profits dropped sharply. Rising tariffs, higher research costs, and fierce competition weighed on earnings despite strong sales.
Revenue climbs while profits slide
For the quarter ending September, Tesla reported $28 billion (£21 billion) in revenue, up 12% from last year. Profits fell 37% due to rising tariffs and increased research and development spending.
Investors reacted cautiously. Tesla shares dropped 3.8% in after-hours trading. Still, the company’s market value remains around $1.4 trillion, supported by confidence in Elon Musk’s long-term ambitions in AI and robotics.
Federal tax credits drive US sales surge
Tesla reversed its sales decline as American buyers rushed to claim federal tax credits of up to $7,500 before they expired in September. The surge boosted Tesla’s numbers, though rivals like Ford and Hyundai posted even stronger growth.
Tesla also launched a six-seat Model Y, which proved particularly popular in China. The company offered incentives including five-year interest-free loans and insurance subsidies to attract more buyers.
Tariffs and R&D spending pressure profits
Tariffs on imported car parts and raw materials remain a major challenge. Finance chief Vaibhav Taneja said these levies cost Tesla more than $400 million last quarter.
Research and development expenses also rose, particularly in artificial intelligence. Taneja said Tesla expects costs to keep increasing as it advances automation and technology initiatives.
Cheaper models fail to impress investors
In October, Tesla unveiled lower-cost versions of its Model Y and Model 3 in the US, cutting prices by about $5,000 to maintain sales after federal incentives ended.
Investors remained underwhelmed. Tesla shares fell further as markets reacted cautiously. Analysts say Tesla’s slow rollout of affordable vehicles has allowed competitors to gain ground in the fast-growing electric car market.
