Tesla achieved its highest quarterly revenue yet, but profits fell sharply. Rising tariffs, higher research costs, and growing competition weighed on earnings despite strong demand.
Revenue climbs, profits slide
For the quarter ending September, Tesla posted $28 billion (£21 billion) in revenue, a 12% increase from last year. Profits fell 37% due to higher tariffs and growing investment in research and development.
Investors reacted cautiously. Tesla shares dropped 3.8% in after-hours trading. Still, the company maintains a market value of around $1.4 trillion, supported by confidence in Elon Musk’s plans for AI and robotics.
Tax credit rush fuels 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 improved Tesla’s numbers, but competitors like Ford and Hyundai posted even faster US growth.
The company also rolled out a six-seat Model Y, which proved especially popular in China. Tesla offered incentives such as five-year interest-free loans and insurance subsidies to attract more buyers.
Tariffs and research spending weigh on earnings
US tariffs on imported parts and raw materials continue to challenge Tesla. Finance chief Vaibhav Taneja said these levies cost 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 the company expands automation and technology initiatives.
Cheaper models fail to excite investors
In October, Tesla introduced lower-cost versions of its Model Y and Model 3 in the US, cutting prices by roughly $5,000 per vehicle to boost demand after federal incentives ended.
Investors remained unimpressed. Tesla shares slipped further as markets reacted lukewarmly. Analysts say Tesla’s slow rollout of affordable cars has allowed competitors to gain ground in the growing electric vehicle market.
