Tesla achieved its highest quarterly revenue ever, yet profits fell sharply. Rising tariffs, higher research costs, and intense competition pressured earnings despite strong sales.
Revenue rises while profits decline
For the quarter ending September, Tesla reported $28 billion (£21 billion) in revenue, up 12% from last year. Profits dropped 37% due to tariffs and increased research and development spending.
Investors reacted cautiously. Tesla shares fell 3.8% in after-hours trading. Still, the company’s market value remains around $1.4 trillion, fueled 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 improved Tesla’s numbers, though competitors like Ford and Hyundai reported even stronger growth.
The company also rolled out a six-seat Model Y, which proved particularly popular in China. Tesla offered incentives including five-year interest-free loans and insurance subsidies to attract more buyers.
Tariffs and research spending weigh on profits
Tariffs on imported parts and raw materials continue to challenge Tesla. Finance chief Vaibhav Taneja said these levies cost the company over $400 million last quarter.
Research and development expenses also rose, particularly in artificial intelligence. Taneja said Tesla expects spending to continue increasing as it expands automation and advanced technology projects.
Lower-cost models fail to excite investors
In October, Tesla launched cheaper 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 argue Tesla’s slow rollout of affordable vehicles has allowed rivals to gain ground in the fast-growing electric vehicle market.
