Tesla reports steep drop in profits despite US rush to buy electric vehicles

Summary

Despite record vehicle sales, Tesla saw a precipitous drop in profit in its most recent quarter.A rush to buy electric vehicles before a US tax credit for them disappears had boosted Tesla’s flagging sales, leading to the automaker exceeding some of Wall Street’s projections in its most recent financial quarter. Yet the company failed to meet earnings expectations and its stock fell in after-hours trading.Tesla reported third-quarter earnings of $0.50 a share on Wednesday after market close, less than the $0.54 that market analysts predicted. The automaker exceeded Wall Street’s expectations of $26.457bn in revenue. Its operating income was $1.62bn against expectations of $1.65bn. It also reported a net income of $1.4bn, down from $2.2bn, a drop of 37% in its profits.Tesla’s deliveries in the third quarter surged from earlier in the year, an increase that analysts attributed to consumers attempting to lock in electric vehicle tax credits that expired at the end of last month. The loss of EV credits as a result of Donald Trump’s One Big Beautiful Bill Act was a factor in the public breakup between Musk and the president and has continued to influence the company’s sales forecasts.The company made numerous optimistic mentions of its AI software and commitment to expand its autonomous driving technology in a press release on the results, while also citing “shifting trade, tariff and fiscal policy” as challenges it is navigating.“No one can do what we can do with real-world AI,” Musk claimed during an investor call. He also claimed that Tesla’s Optimus robots, which received only a fleeting mention in the earnings report, had the potential to become “the biggest product of all time”.“We believe, with Optimus and self-driving, that you can actually create a world with no poverty,” Musk added. He also referenced his proposed $1tn pay package, which he claimed would give him a defense against being “ousted” once Tesla built a “robot army”.The earnings report comes at a sen...