Tesla posted its highest quarterly revenue ever, yet profits fell sharply. Rising tariffs, increasing research costs, and strong competition pressured earnings despite high demand.
Revenue climbs while profits drop
For the quarter ending September, Tesla reported $28 billion (£21 billion) in revenue, a 12% rise from last year. Profits declined 37% due to higher tariffs and expanded research and development spending.
Investors reacted cautiously. Tesla shares fell 3.8% in after-hours trading. Despite the drop, the company’s market value remains around $1.4 trillion, fueled by confidence in Elon Musk’s AI and robotics ambitions.
Federal tax credits boost 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 lifted Tesla’s numbers, but competitors like Ford and Hyundai posted even stronger growth.
The company also launched a six-seat Model Y, which performed particularly well in China. Tesla offered incentives including five-year interest-free loans and insurance subsidies to attract more buyers.
Tariffs and research costs pressure earnings
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 spending also climbed, particularly in artificial intelligence. Taneja said Tesla expects costs to keep rising as it expands automation and advanced technology projects.
Cheaper models fail to excite investors
In October, Tesla unveiled lower-cost versions of its Model Y and Model 3 in the US, cutting prices by about $5,000 to maintain demand 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.
