TLDR
- Tesla reported Q3 revenue of $28.01 billion, beating the $26.27 billion estimate, but earnings per share missed at $0.50 versus $0.54 expected
- The company delivered a record 497,099 vehicles in Q3, surpassing forecasts as customers rushed to secure federal EV tax credits before the September 30 deadline
- Operating profit declined 40% to $1.624 billion due to reduced regulatory credit income and $400 million in tariff expenses
- Elon Musk announced Robotaxi service without safety drivers will launch in Austin by December, with plans to expand to 8-10 cities including Nevada, Florida, and Arizona
- Shares dropped nearly 4% in Frankfurt and 3% in US pre-market trading following the earnings announcement
Tesla delivered mixed third quarter results Wednesday that pushed shares lower in early Thursday trading. Revenue hit $28.01 billion, topping the $26.27 billion Wall Street forecast. Earnings per share landed at $0.50, falling short of the $0.54 estimate.
The company moved a record 497,099 vehicles during the quarter, crushing analyst expectations of 439,800 units. This marked a jump from last year’s 462,890 deliveries and set a new quarterly record.
Operating profit dropped 40% year-over-year to $1.624 billion. Two factors dragged on profitability: declining regulatory emissions credit revenue and escalating tariff costs.
Shares fell 3.9% in Frankfurt trading and declined roughly 3% in US pre-market sessions. The stock sits 10% lower year-to-date in Frankfurt versus an 8.7% rise in New York.
Tax Credit Rush Boosts Sales
Most of Q3’s strong delivery numbers came before September 30, when the federal EV tax credit expired. Buyers rushed to lock in the benefit before the deadline, potentially borrowing sales from future quarters.
Tesla also posted a record 12.5 gigawatt-hours of energy storage product deployments. Total revenue climbed 12% from the $25.18 billion reported in Q3 2024.
CEO Elon Musk previously warned investors to expect “a few rough quarters” following the tax credit expiration. The Q4 results will test that forecast.
Tesla introduced budget-friendly Model Y and Model 3 variants in early October to address affordability. The stripped-down versions feature rear-wheel drive, smaller batteries, and reduced amenities. Pricing starts at $39,990 for Model Y and $36,990 for Model 3.
Tariff Costs Jump $100 Million
Tesla’s tariff bill increased from $300 million in Q2 to $400 million in Q3. The 25% auto sector tariffs on imported vehicles and components continue pressuring margins.
“It is difficult to measure the impacts of shifting global trade and fiscal policies on the automotive and energy supply chains, our cost structure and demand for durable goods and related services,” the company noted in its release.
These trade policy headwinds persist despite Tesla’s domestic manufacturing footprint. The company faces the same challenges as traditional automakers navigating President Trump’s unpredictable tariff policies.
Robotaxi Expansion Gets Timeline
Musk provided specific updates on autonomous vehicle plans during the earnings call. “We are expecting to have no safety drivers in large parts of Austin by the end of this year,” he told investors.
Tesla aims to test Robotaxis in 8 to 10 metro areas by December. The expansion will include Nevada, Florida, and Arizona markets.
The company launched initial Robotaxi testing in Austin during summer 2025 and expanded the service area weeks later. Safety drivers currently remain in all vehicles. Tesla also operates ride-hailing tests with human drivers in the San Francisco Bay Area.
Wedbush analyst Dan Ives maintains a $600 price target and sees autonomous technology adding $1 trillion to Tesla’s valuation over the next few years. “We continue to strongly believe the most important chapter in Tesla’s growth story is now beginning with the AI era now here,” Ives wrote.
Tesla shareholders will vote November 6 on Musk’s $1 trillion compensation package. Both Glass Lewis and ISS proxy advisers recommended shareholders reject the proposal.
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