Tesla posted its highest-ever quarterly revenue, yet profits dropped significantly. Rising tariffs, growing research costs, and intense competition weighed on earnings despite strong demand.
Revenue climbs while profits slide
For the quarter ending September, Tesla reported $28 billion (£21 billion) in revenue, a 12% increase from last year. Profits fell 37% due to higher tariffs and rising research and development spending.
Investors reacted cautiously. Tesla shares fell 3.8% in after-hours trading. Still, the company’s market value remains around $1.4 trillion, supported by confidence in Elon Musk’s long-term ambitions in AI and robotics.
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 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 R&D spending squeeze profits
Tariffs on imported car parts and raw materials continue to challenge Tesla. Finance chief Vaibhav Taneja said these levies cost the company more than $400 million last quarter.
Research and development expenses also rose, particularly in artificial intelligence. Taneja said Tesla expects costs to keep climbing 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 sustain sales after federal incentives ended.
Investors remained underwhelmed. Tesla shares fell further as markets reacted cautiously. Analysts say Tesla’s slow rollout of affordable vehicles has allowed rivals to gain ground in the fast-growing electric vehicle market.
