Tesla (TSLA) Stock: Profit Falls Short Despite Record Vehicle Sales Quarter

TLDR

• Tesla posted Q3 revenue of $28.01 billion, exceeding the $26.27 billion consensus, while earnings per share of $0.50 fell short of the $0.54 forecast
• The electric vehicle maker delivered 497,099 vehicles in Q3, setting a company record and beating estimates as buyers claimed federal tax credits before expiration
• Operating profit tumbled 40% to $1.624 billion, pressured by lower regulatory credit sales and $400 million in tariff costs
• CEO Elon Musk stated Tesla will operate Robotaxis without safety drivers in Austin by year-end and expand testing to 8-10 cities
• Stock declined 4% in Frankfurt and 3% in US pre-market after the earnings report

Tesla reported third quarter results Wednesday evening that disappointed Wall Street despite strong revenue performance. The company generated $28.01 billion in revenue, beating analyst estimates of $26.27 billion. However, earnings per share came in at $0.50, missing the $0.54 consensus.

Vehicle deliveries reached 497,099 units for the quarter, crushing expectations of 439,800 and establishing a new company record. This represented growth from the 462,890 vehicles delivered in the same period last year.

Tesla, Inc., TSLA

Operating profit fell 40% compared to last year, dropping to $1.624 billion. The decline stemmed from reduced regulatory emissions credit revenue and mounting tariff expenses.

Shares traded 3.9% lower in Frankfurt Thursday morning and dropped approximately 3% in US pre-market trading. Year-to-date, the stock is down 10% in Frankfurt while showing an 8.7% gain in New York.

September Tax Credit Expiration Influences Q3 Performance

The strong delivery numbers reflect heavy customer activity before September 30, when federal EV tax credits ended. Many buyers accelerated purchases to capture the benefit before the deadline.

Tesla also achieved record energy storage deployments of 12.5 gigawatt-hours during the quarter. Overall revenue increased 12% from the $25.18 billion reported in Q3 2024.

The company rolled out more affordable Model Y and Model 3 versions in October to maintain demand. These standard editions eliminate certain features and use smaller batteries with rear-wheel drive configurations. The Model Y costs $39,990 while the Model 3 starts at $36,990.

Tariff Expenses Rise Quarter Over Quarter

Tesla’s tariff burden increased from $300 million in Q2 to $400 million this quarter. The company continues facing 25% tariffs on imported automotive components and finished vehicles.

President Trump’s evolving tariff approach creates ongoing challenges for automakers including Tesla, despite the company’s substantial US manufacturing operations.

Autonomous Vehicle Program Advances

Musk provided concrete timelines for Robotaxi expansion during Wednesday’s earnings call. “We are expecting to have no safety drivers in large parts of Austin by the end of this year,” he announced.

The company plans to test its autonomous vehicles in 8 to 10 metropolitan areas by December. Nevada, Florida, and Arizona will be among the expansion markets.

Tesla began Robotaxi trials in Austin this summer and enlarged the service area in subsequent weeks. All current Robotaxis still include safety drivers. The company separately tests ride-hailing with human drivers in the San Francisco Bay Area.

Wedbush analyst Dan Ives sees major upside from autonomous technology. He maintains a $600 price target and estimates the autonomous business could contribute $1 trillion to Tesla’s market value within several years.

Shareholders face a November 6 vote on Musk’s $1 trillion pay package. Proxy advisory firms Glass Lewis and ISS both issued recommendations against approval.

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