Tesla reported record third-quarter revenue that beat Wall Street estimates on Wednesday, driven by the very best quarterly sales of its electric vehicles as US buyers rushed to lock in a key tax credit ahead of its expiration last month.
But Tesla’s profit didn’t live as much as analysts’ expectations, partially because of tariff and research costs, in addition to a drop in income from regulatory credits which can be expected to proceed to fade away with recent laws passed by the Trump administration.
Shares of the Austin, Texas-based company were down about 2% to $427.29 in prolonged trading.
Demand for Tesla’s vehicles and people of its rivals can also be expected to drop through the remaining of the yr without the tax credits which were a key driver of EV sales. Tesla didn’t provide a full-year forecast.
Tesla’s $1.45 trillion valuation largely reflects investor bets on CEO Elon Musk’s pivot to robotics and AI, but vehicle sales remain key to the financial stability of the corporate while those products are being developed.
“While we face near-term uncertainty from shifting trade, tariff and financial policy, we’re focused on long-term growth and value creation,” the corporate said on Wednesday.
Other than the removal of tax credits and the waning sales of regulatory credits that traditional automakers bought to make up for his or her polluting vehicles, Tesla can also be grappling with tariffs imposed by the Trump administration on auto-part imports.
To combat a requirement drop, Tesla introduced lower-cost “Standard” variants of Model Y and Model 3 vehicles earlier this month, stripping out a myriad of premium and basic features and lowering prices by about $5,000 to $5,500.
While Tesla hopes the cheaper variants will drive higher volumes, analysts warn the move will squeeze margins as hundreds of dollars of cost cuts per vehicle may not fully compensate for lower selling prices.
Tesla said it was on target to begin volume production of its Cybercab robotaxi, Semi truck and Megapack 3 battery in 2026.
The electrical vehicle maker reported total revenue of $28.1 billion for the third quarter ended September 30, compared with analysts’ average estimate of $26.37 billion, in accordance with data compiled by LSEG.
Profit per share within the third quarter was 50 cents, below analysts’ estimates of 55 cents.
Automotive regulatory credits, once a key driver of profit, fell to $417 million within the quarter from $739 million a yr ago and $435 million within the second quarter.
Tesla reported gross margin of 18%, compared with estimates of 17.5%. Its closely watched automotive gross margin, excluding regulatory credits, was 15.4%, compared with a mean estimate of 15.6%, in accordance with 19 analysts polled by Visible Alpha.
Tesla flagged rising expenses in multiple areas, including a 50% rise in operating expenses driven by AI and other research and development projects, a rise in stock-based compensation, and better costs per vehicle because of a rise in tariffs and other issues.
Tesla’s limited rollout of its self-driving “robotaxi” service in Austin, Texas, earlier this yr marked a key strategic pivot, underpinning investor expectations that the corporate will transition from pure vehicle sales to specializing in self-driving technology.
Wall Street expects Tesla’s deliveries in 2025 to fall 8.5% because of the expiration of the tax credit, reliance on older models and rising competition. CEO Musk’s embrace of right-wing politics has also alienated some potential buyers.
Some analysts remain skeptical of a robust rebound because the cheaper version could take away sales of more profitable premium vehicles.
Tesla reported record third-quarter revenue that beat Wall Street estimates on Wednesday, driven by the very best quarterly sales of its electric vehicles as US buyers rushed to lock in a key tax credit ahead of its expiration last month.
But Tesla’s profit didn’t live as much as analysts’ expectations, partially because of tariff and research costs, in addition to a drop in income from regulatory credits which can be expected to proceed to fade away with recent laws passed by the Trump administration.
Shares of the Austin, Texas-based company were down about 2% to $427.29 in prolonged trading.
Demand for Tesla’s vehicles and people of its rivals can also be expected to drop through the remaining of the yr without the tax credits which were a key driver of EV sales. Tesla didn’t provide a full-year forecast.
Tesla’s $1.45 trillion valuation largely reflects investor bets on CEO Elon Musk’s pivot to robotics and AI, but vehicle sales remain key to the financial stability of the corporate while those products are being developed.
“While we face near-term uncertainty from shifting trade, tariff and financial policy, we’re focused on long-term growth and value creation,” the corporate said on Wednesday.
Other than the removal of tax credits and the waning sales of regulatory credits that traditional automakers bought to make up for his or her polluting vehicles, Tesla can also be grappling with tariffs imposed by the Trump administration on auto-part imports.
To combat a requirement drop, Tesla introduced lower-cost “Standard” variants of Model Y and Model 3 vehicles earlier this month, stripping out a myriad of premium and basic features and lowering prices by about $5,000 to $5,500.
While Tesla hopes the cheaper variants will drive higher volumes, analysts warn the move will squeeze margins as hundreds of dollars of cost cuts per vehicle may not fully compensate for lower selling prices.
Tesla said it was on target to begin volume production of its Cybercab robotaxi, Semi truck and Megapack 3 battery in 2026.
The electrical vehicle maker reported total revenue of $28.1 billion for the third quarter ended September 30, compared with analysts’ average estimate of $26.37 billion, in accordance with data compiled by LSEG.
Profit per share within the third quarter was 50 cents, below analysts’ estimates of 55 cents.
Automotive regulatory credits, once a key driver of profit, fell to $417 million within the quarter from $739 million a yr ago and $435 million within the second quarter.
Tesla reported gross margin of 18%, compared with estimates of 17.5%. Its closely watched automotive gross margin, excluding regulatory credits, was 15.4%, compared with a mean estimate of 15.6%, in accordance with 19 analysts polled by Visible Alpha.
Tesla flagged rising expenses in multiple areas, including a 50% rise in operating expenses driven by AI and other research and development projects, a rise in stock-based compensation, and better costs per vehicle because of a rise in tariffs and other issues.
Tesla’s limited rollout of its self-driving “robotaxi” service in Austin, Texas, earlier this yr marked a key strategic pivot, underpinning investor expectations that the corporate will transition from pure vehicle sales to specializing in self-driving technology.
Wall Street expects Tesla’s deliveries in 2025 to fall 8.5% because of the expiration of the tax credit, reliance on older models and rising competition. CEO Musk’s embrace of right-wing politics has also alienated some potential buyers.
Some analysts remain skeptical of a robust rebound because the cheaper version could take away sales of more profitable premium vehicles.
