Tesla’s latest quarterly report shows the electric-car maker couldn’t benefit from record sales, driven by the prospect of the EV credit abortion in its home country.
Despite delivering a record 497,099 vehicles in the third quarter — a 7 percent increase year over year — the company’s net profit tumbled 37 percent to $1.37 billion. Costs are clearly climbing higher than turnover.
To break down the numbers: revenue increased 12 percent to $28.1 billion (€26.1 billion), but higher operational costs, protectionist tariffs, and growing competition from China weighed heavily on results.
Chief Financial Officer Vaibhav Taneja informed analysts that the impact of tariffs exceeded $400 million (€372 million) in the quarter, while spending on artificial intelligence, research, and restructuring also increased. Tesla’s shares fell more than 3 percent in after-hours trading following the announcement.
Tax credit rebound
As expected, the third-quarter sales rebound was to a considerable extent fueled by the final phase of the US federal tax credit that President Trump slashed at the end of September. The $7,500 (€6,975) incentive had spurred significant last-minute demand, particularly for Tesla’s mass-market models.
That temporary lift can’t hide deeper challenges. Outdated product lines and intensifying competition from BYD and other Chinese automakers, whose lower-cost EVs are eroding Tesla’s market share. How deep exactly these challenges run will be demonstrated during the final quarter of the year, when the portfolio must sell itself without state aid.
Recovery in Europe?
However, Tesla is anticipating. It has rolled out the cheaper Standard versions of the Model 3 and Model Y, priced below $40,000. These are marketed to compensate for the lack of incentives in the US and to boost registrations in other countries’ global markets, such as Europe.
In countries experiencing a sales revival, such as Spain, France, and Scandinavia, this could further boost sales. Customers in these countries appear to have come to terms with Musk’s political escapades, and confidence seems to be slowly restored.
Tesla’s European arm is also seeking to regain traction with its premium lineup. The updated Model S and Model X — temporarily pulled from Tesla’s European configurator earlier this year — are returning to showrooms in November.
The refreshed versions feature better sound insulation, retuned air suspension, and improved energy efficiency. Both now include adaptive headlights, blind-spot indicators, and upgraded cameras. But these are not bread-and-butter models.
Analysts at Deutsche Bank expect deliveries to decline by approximately 15% to 425,000 units in the final quarter. Last year, the company managed half a million vehicles during the same period.
Control over the robot army
In typical fashion, Musk sought to divert investor attention from the doubtful outlook. During a call, he pointed toward Tesla’s broader technological ambitions. The company reiterated plans to start large-scale production in 2026 of its long-delayed robotaxi, dubbed Cybercab, and the next-generation Semi truck alongside the Optimus humanoid robot.
Those robots, which still need to prove their worth beyond teleoperations, surfaced in an eyebrow-raising comment from Musk, in which he tried to explain why he is entitled to a pay package of 1 trillion dollars – no typo, it really is 1 trillion dollars – that needs shareholder approval.
This scheme would raise his share in Tesla from 13% to roughly 25%, a stake the CEO claims is necessary to control the robot army Tesla is planning to comfortably manage.
“My fundamental concern about how much money and control I have at Tesla is if I go ahead and build this enormous robot army, can I just be ousted at some point in the future?”, he said. Mindful of the weight of the word ‘control,’ he corrected himself further down the reasoning: “Not control but a strong influence.”
Sued by shareholders
Whether Musk is aiming for a top job as an Optimus general remains up for debate, but it does point to Tesla’s push for heavy AI development, a soft spot for investors these days. However, the company insists it has sufficient cash reserves to fund these projects.
On the other hand, a group of shareholders at Tesla is actually suing Musk over his private company, xAI, in what they claim to be ‘a conflict of interest’. They believe his AI project is competing with Tesla for talent. They want him to transfer the ownership to Tesla altogether.
