Tesla reported a significant decline in its third-quarter net profit and operating margins, despite achieving record vehicle sales and exceeding revenue forecasts.
Net income fell 29% to $1.77 billion, down from $2.5 billion in the same period last year.
Adjusted earnings per share (EPS) were $0.50, missing analyst expectations of $0.54. This marked a 31% drop from $0.72 per share a year ago.
Operating revenue plunged 40% year-on-year to $1.6 billion, resulting in an operating margin of 5.8%.
The electric vehicle manufacturer attributed the downturn to increased operating expenses, a reduction in environmental regulatory credit revenue, and a higher average cost per vehicle. The company noted that U.S. tariffs from the previous administration contributed to these costs.
The earnings miss comes even as the company reported record revenue of $28.1 billion, an increase of 12% from $25.2 billion in the year-ago quarter, surpassing predictions.
Tesla also achieved record deliveries during the quarter. These were temporarily boosted by a $7,500 U.S. federal tax credit for electric vehicle purchases, which concluded on September 30.
Looking ahead, analysts surveyed by Bloomberg anticipate Tesla’s sales to decrease in 2025, marking the second consecutive year of expected decline.
The company reiterated that it is “difficult to measure” the impact of global fiscal and trade policies on its operations.
Tesla stated that while it continues to innovate to lower production and operating costs, it expects hardware-related profits to be “accompanied by an acceleration of profits based on the acceleration of AI, software and fleets” over time.
The earnings report from the Elon Musk-led company makes it the first of the “Magnificent Seven” technology firms to release its latest financial results.