Tesla posted its highest quarterly revenue ever, yet profits dropped significantly. Rising tariffs, higher research costs, and stiff competition weighed on earnings despite strong demand.
Revenue rises while profits decline
For the quarter ending September, Tesla reported $28 billion (£21 billion) in revenue, a 12% increase from last year. Profits fell 37% due to tariffs and growing research and development expenses.
Investors reacted cautiously. Tesla shares dropped 3.8% in after-hours trading. Still, the company’s market value remains around $1.4 trillion, fueled by confidence in Elon Musk’s ambitions in AI and robotics.
Federal tax credits drive 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 boosted Tesla’s numbers, though competitors like Ford and Hyundai posted even stronger 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 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 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 unveiled 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 argue Tesla’s slow rollout of affordable vehicles has allowed rivals to gain ground in the fast-growing electric vehicle market.
