Tesla posted sharply lower profit for the July to September quarter despite a signifcant jump in revenue. The firm’s performance was hit by tough competition in the EV market, U.S. duties on imports of parts and materials to make its cars, higher capital expenditure costs and a sales slump in Europe. File photo by Divyakant Solanki/EPA
Oct. 23 (UPI) — Tesla reported profits were down 37% in the third quarter despite a jump in revenue to $28.1 billion on frontloading of sales driven by buyers racing to beat the deadline for a federal tax credit before it expired Sept. 30.
The tax credit, worth up to $7,500 on EV purchases, helped the firm buck a run of declining quarterly sales along with a new six-seat version of its popular Model Y midsize SUV that performed well in the Chinese market.
While sales of competitors, including Ford and Hyundai, still outpaced Tesla’s it also lured in buyers with interest-free finance and insurance contributions.
That helped overall income rise by just under $3 billion, compared with the same period last year, and $1.73 billion more than predicted by analysts, with the largest contribution still coming from vehicle sales.
Revenue from Tesla’s energy generation and storage division surged 44% to $3.42 billion.
However, net profit slumped from $2.17 billion in the third quarter of 2024, to just $1.37 billion this year, with the results sending the stock price lower.
Tesla’s shares were down more than 3% at $424.60 in out-of-hours trade on the NASDAQ before Thursday’s market open — but remained well above the 30-day low of $413.49 they hit Oct. 10. The stock is up 9% year-to-date.
The firm’s performance was dragged down by an ongoing slump in its European market, partly due to a public backlash against Musk and tough competition from rivals from the continent and beyond, such as Volkswagen and China’s BYD.
Tariffs on car parts and raw materials imposed by President Donald Trump and higher research and development costs were also factors as the company embarks on CEO Elon Musk‘s efforts for an increased focus on AI and robotics.
Chief Accounting Officer Vaibhav Taneja told investors on a conference call Wednesday that the hit to Tesla from import duties in the July to September period was in excess of $400 million.
Tesla said it aimed to meet its target to begin “volume production” of Cybercab, heavy-duty electric semi trucks and its new Megapack 3 battery energy storage system in 2026, with Musk saying he expected Cybercab to begin rolling off the production line in the second quarter.
“First generation production lines” for Tesla’s humanoid Optimus robot were currently under construction. Musk said the firm expected to unveil Optimus V3 in the first quarter.
Tesla posted its latest results as shareholders were preparing for a November vote to approve a new remuneration package for Musk of as much as $1 trillion, all in shares.
The deal would be conditioned on his delivering an ambitious turnaround program involving boosting market capitalization from around $1.38 trillion to an unprecedented $8.5 trillion by pivoting Tesla to concentrate on autonomous driving, AI and robotics.
Apple, Microsoft and NVIDIA, the current behemoths of the U.S. tech sector, have market caps in the $2.6 to $3.2 trillion range.