Tesla announced a 12% rise in revenue for the third quarter on Wednesday, following two consecutive quarters of decline. Nevertheless, earnings came in below analyst expectations, leading to a near 5% drop in stock price during after-hours trading.
This is how the company performed against analyst estimates provided by LSEG:
- Earnings per share: 50 cents adjusted compared to 54 cents anticipated
- Revenue: $28.10 billion against $26.37 billion expected
Total revenue increased from $25.18 billion a year prior. Automotive revenue rose 6% to $21.2 billion from $20 billion in the same quarter last year, according to Tesla.
Net income dropped 37% to $1.37 billion, or 39 cents per share, down from $2.17 billion, or 62 cents per share in the previous year. This profit reduction was attributed to decreased EV prices and a 50% surge in operating expenses, which the company stated was partly due to advancements in artificial intelligence and “other R&D initiatives.”
The conclusion of the quarter coincided with the end of federal tax incentives for electric vehicles, which were terminated by President Donald Trump’s spending legislation. This prompted sales to surge as consumers sought to benefit from the incentives before they disappeared.
During Tesla’s last earnings call in July, CEO Elon Musk and CFO Vaibhav Taneja alerted shareholders about the repercussions of increased tariffs and the loss of tax credits.
Revenue from automotive regulatory credits in the quarter dropped 44% to $417 million from $739 million.
Despite returning to overall growth, Tesla’s third quarter was overshadowed by a persistent sales decline in Europe, influenced partly by consumer discontent with Musk, his controversial political statements, activism, and competition from EV manufacturers such as Volkswagen and BYD.
The stock, which suffered a sharp decline earlier in the year, has rebounded and is now up nearly 9% in 2025. However, it still lags behind major indices and many of its other large-cap competitors.
The shares fell during the earnings call on Wednesday as executives provided minimal guidance for investors, with Musk reiterating his ambitious futuristic plans. A key concern is the slow advancement of the company’s Full Self Driving system. Taneja noted that customers paying for FSD Supervised, its partially automated system, make up only 12% of Tesla’s current fleet.
Tesla did not provide specific volume guidance in its shareholder presentation or during the call, but mentioned it still aims to commence “volume production” of the Cybercab, heavy-duty electric Semi trucks, and a new battery energy storage solution known as Megapack 3 in 2026.
Musk indicated on the call that he foresees Cybercab production starting in the second quarter.
The company also disclosed that it is currently establishing “first generation production lines” for its humanoid Optimus robots. Musk stated that Tesla anticipates unveiling its Optimus V3 in the first quarter.
Tesla introduced its fully electric Semi in November 2017. Although the company has delivered a few of these trucks to initial clients, it still refers to the Semi production lines as “under construction.”
Lars Moravy, a vice president at Tesla, commented on the call that the company has developed production lines, is in the process of installing some equipment, and has a “fleet of validation trucks in operation.” Nonetheless, Tesla is still working on a version of its semi-autonomous driving system for the Semi.
Instead of committing to a specific number of EVs and energy products by year-end, Tesla remarked, “Evaluating the influences of evolving global trade and fiscal policies on the automotive and energy supply chains, our cost framework, and demand for durable goods and associated services is complex.”
Tesla noted it has expanded its “service area and fleet count” for its Robotaxi service in Austin, which includes safety drivers onboard, and introduced its Bay Area ride-hailing service. The company mentioned it is gathering data that will enable it to “rapidly scale to additional cities in the future” with what it identifies as a “universal model.”
During the call, Musk expressed his expectation that Tesla will eliminate the human safety drivers from its Austin Robotaxi vehicles this year, stating that the company should be operating the service in eight to ten metropolitan areas by the end of 2025. In emerging markets, Tesla initially plans to have safety drivers for a minimum of three months.
Earlier this month, Tesla reported deliveries of 497,099 vehicles for the third quarter, a record, on total production of 447,450 vehicles. However, deliveries for the first three quarters totaled approximately 1.2 million, reflecting a 6% decline compared to the same timeframe in 2024.
Tesla also introduced more affordable alternatives of its popular Model Y SUV and Model 3 sedan in early October. The company announced on Wednesday that these new options make “our products more available to consumers following the lapse of the EV tax credit in the U.S.”
The company’s main growth driver during the quarter was its energy generation and storage division, which experienced a revenue surge of 44% to $3.42 billion. Tesla’s energy products encompass large backup batteries and solar photovoltaics capable of powering data centers and various facilities. Tesla’s energy segment now constitutes about one-quarter of its total revenue.
Musk’s AI venture xAI, initiated in 2023, has been a significant purchaser of Tesla’s energy products. In its 2024 annual report, Tesla noted that xAI incurred expenses of approximately $198.3 million for the year and $36.9 million through February of 2025, primarily for Tesla’s Megapack items.
The head of investor relations, Travis Axelrod, declined twice to read shareholder inquiries during the call that related to future products, indicating initially that “this is not the appropriate venue for that.”
