Tesla reached its highest quarterly revenue, yet profits fell sharply. Rising tariffs, growing research costs, and intense competition weighed on earnings despite strong sales.
Revenue climbs as profits slide
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 credits drive US sales surge
Tesla reversed a sales decline 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, but rivals such as Ford and Hyundai posted even stronger US growth.
The company also launched a six-seat Model Y, which proved particularly popular in China. Tesla offered incentives including five-year interest-free loans and insurance subsidies to attract more buyers.
Tariffs and research costs pressure profits
Tariffs on imported car parts and raw materials remain a major challenge. Finance chief Vaibhav Taneja said these levies cost Tesla more than $400 million last quarter.
Research and development spending also rose, particularly in artificial intelligence. Taneja said Tesla expects costs to continue rising as it advances automation and technology initiatives.
Lower-cost models fail to impress investors
In October, Tesla unveiled cheaper versions of its Model Y and Model 3 in the US, cutting prices by about $5,000 to sustain demand after federal incentives ended.
Investors remained underwhelmed. Tesla shares fell further as markets reacted cautiously. Analysts say Tesla’s slow rollout of affordable cars has allowed competitors to gain ground in the fast-growing electric vehicle market.
