Tesla achieved its highest quarterly revenue yet, but profits fell significantly. Rising tariffs, growing research costs, and stiff competition pressured 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. Despite the decline, the company’s market value remains around $1.4 trillion, supported by confidence in Elon Musk’s ambitions in AI and robotics.
Federal tax credit drives 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 lifted Tesla’s numbers, but rivals like Ford and Hyundai posted even stronger US growth.
Tesla also launched a six-seat Model Y, which performed especially well in China. The company offered additional incentives, including five-year interest-free loans and insurance subsidies, to attract buyers.
Tariffs and research costs pressure profits
Tariffs on imported parts and raw materials remain a major challenge. Finance chief Vaibhav Taneja said these levies cost Tesla over $400 million last quarter.
Research and development expenses also increased, particularly in artificial intelligence. Taneja said Tesla expects spending to rise further as it advances automation and technology projects.
Lower-cost models fail to excite investors
In October, Tesla unveiled cheaper versions of its Model Y and Model 3 in the US, reducing prices by about $5,000 to boost demand after federal incentives ended.
Investors remained underwhelmed. Tesla shares slipped further as markets reacted lukewarmly. Analysts say Tesla’s slow rollout of affordable vehicles has allowed rivals to gain ground in the fast-growing electric car market.
