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Source: BBC News
DST News: Tesla’s profits have dropped even as the company reported record quarterly revenue, driven by a rush among US buyers to take advantage of an electric vehicle tax credit before it expired last month.
Revenue for the three months ending in September reached a record $28 billion (£21 billion), marking a 12% increase compared with the same period last year. However, profits fell 37%, a decline linked to higher costs from tariffs and increased spending on research and development.
The results come just weeks before shareholders vote in November on a proposed $1 trillion compensation package for CEO Elon Musk. Following the earnings release, Tesla’s shares dropped 3.8% in after-hours trading.
Despite a market valuation of about $1.4 trillion, largely buoyed by investor optimism over Musk’s ambitions in artificial intelligence (AI) and robotics, Tesla’s core business remains dependent on car sales. Meanwhile, competition from Chinese automakers such as BYD continues to intensify.
The company reversed several quarters of declining sales, thanks to American customers hurrying to claim federal tax incentives of up to $7,500 before they ended in September. Still, rivals like Ford and Hyundai achieved even stronger sales growth during the same period.
During the quarter, Tesla launched a six-seat version of its popular Model Y, which performed particularly well in China. It also rolled out buyer incentives such as five-year interest-free loans and insurance subsidies to boost demand.
Tesla continues to face financial pressure from tariffs on imported parts and raw materials imposed by US President Donald Trump, which cost the firm over $400 million last quarter, according to Chief Financial Officer Vaibhav Taneja. He added that rising research and AI development expenses also weighed heavily on the company’s earnings and would likely continue to increase.
In October, Tesla introduced cheaper versions of its Model Y and Model 3 vehicles in the US, priced around $5,000 lower than earlier models, in an effort to sustain sales as tax incentives expire. However, investors reacted coolly, sending Tesla’s shares lower.
The company has faced mounting criticism for its slow rollout of affordable vehicles — a factor analysts say has allowed competitors to gain ground in the fast-growing electric car market.
