Tesla recorded its highest quarterly revenue ever, yet profits fell sharply. Rising tariffs, higher research costs, and growing competition weighed on earnings despite strong sales.
Revenue climbs while profits decline
For the quarter ending September, Tesla reported $28 billion (£21 billion) in revenue, a 12% increase from last year. Profits dropped 37% due to higher 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, supported by confidence in Elon Musk’s ambitions in AI and robotics.
US tax credits drive sales surge
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 boosted Tesla’s numbers, though competitors like Ford and Hyundai posted even stronger growth.
Tesla also launched a six-seat Model Y, which performed particularly well in China. The company offered incentives including five-year interest-free loans and insurance subsidies to attract more buyers.
Tariffs and research costs pressure earnings
Tariffs on imported car parts and raw materials continue to challenge Tesla. Finance chief Vaibhav Taneja said these levies cost the company more than $400 million last quarter.
Research and development expenses also climbed, particularly in artificial intelligence. Taneja said Tesla expects spending to continue rising as it expands automation and technology initiatives.
Lower-cost models fail to excite investors
In October, Tesla introduced cheaper versions of its Model Y and Model 3 in the US, cutting prices by about $5,000 to sustain 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 rivals to gain ground in the fast-growing electric vehicle market.
