Tesla achieved its highest quarterly revenue, yet profits dropped significantly. Rising tariffs, increased research costs, and global competition weighed on earnings despite strong demand.
Revenue soars, profits fall
For the quarter ending September, Tesla reported $28 billion (£21 billion) in revenue, up 12% from last year. Profits fell 37% due to higher tariffs and growing research and development expenses.
Investors reacted cautiously. Tesla shares fell 3.8% in after-hours trading. Despite the drop, the company’s market value remains around $1.4 trillion, backed by confidence in Elon Musk’s ambitions in AI and robotics.
Tax credit rush boosts US sales
Tesla reversed a decline in quarterly sales as American buyers rushed to claim federal tax credits of up to $7,500 before they expired in September. The surge lifted Tesla’s numbers, though rivals like Ford and Hyundai achieved even stronger US growth.
Tesla also rolled out 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 research expenses weigh on profits
Tariffs on imported 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 spending also rose, particularly in artificial intelligence. Taneja said Tesla expects costs to continue climbing as it expands automation and advanced technology initiatives.
Lower-cost models fail to excite investors
In October, Tesla launched cheaper versions of its Model Y and Model 3 in the US, reducing prices by about $5,000 to maintain demand after federal incentives ended.
Investors remained underwhelmed. Tesla shares fell further as markets reacted cautiously. Analysts argue that Tesla’s slow rollout of affordable cars has allowed rivals to gain ground in the fast-growing electric vehicle market.
