Tesla posted its highest quarterly revenue ever, yet profits fell significantly. Rising tariffs, higher research costs, and strong competition pressured earnings despite robust demand.
Revenue climbs 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. Despite the decline, the company’s market value remains around $1.4 trillion, backed by confidence in Elon Musk’s AI and robotics ambitions.
Tax credit rush fuels US 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 lifted Tesla’s numbers, though competitors like Ford and Hyundai posted even stronger growth.
Tesla also introduced a six-seat Model Y, which proved especially popular in China. The company offered incentives including five-year interest-free loans and insurance subsidies to attract buyers.
Tariffs and R&D costs weigh on profits
US tariffs on imported car 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 increased, particularly in artificial intelligence. Taneja said Tesla expects costs to continue climbing as it expands automation and advanced technology projects.
Lower-priced models fail to excite investors
In October, Tesla unveiled 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 car market.
