Tesla has reported record quarterly revenue but a sharp drop in profits as rising costs and expiring tax incentives affected performance.
Revenue for the three months ending September reached $28 billion, up 12 percent compared to the same period last year, driven by strong electric vehicle sales in the United States as customers rushed to take advantage of federal tax credits of up to $7,500 before they expired.
However, profits fell by 37 percent during the quarter due to higher expenses from tariffs, research spending, and sales incentives. Tesla’s Chief Financial Officer, Vaibhav Taneja, said tariffs alone added more than $400 million in extra costs during the period.
Tesla’s shares fell about 3.8 percent in after-hours trading after the results were released. The company’s stock market valuation of about $1.4 trillion has been supported by investor optimism that Elon Musk can turn Tesla into a leader in artificial intelligence and robotics, even though car sales remain its main source of income.
The company continues to face stiff competition from Chinese automakers such as BYD, as well as rivals like Ford and Hyundai, which recorded stronger sales growth in the U.S. over the same period.
Tesla recently introduced a six-seat version of its best-selling Model Y in China and launched lower-priced versions of its Model 3 and Model Y in the U.S., about $5,000 cheaper than earlier models. It also offered incentives such as five-year interest-free loans and insurance subsidies to attract customers.
Despite these efforts, investors were left underwhelmed, pointing to Tesla’s slow pace in bringing more affordable models to market as a reason for losing ground to competitors.
The results come ahead of a November shareholder vote on Musk’s proposed new pay package, which could be worth up to $1 trillion, amid growing questions about the company’s profitability and long-term strategy.
