Tesla’s record third-quarter revenue tops forecasts
Tesla reported record third-quarter revenue, beating Wall Street forecasts on top quarterly sales of its electric vehicles as car buyers rushed to lock in a key US tax credit before it expired last month.
The US$7,500 ($11,558) tax credit has been a driver of EV sales, and the industry is bracing for a decline in demand for the rest of the year. Tesla did not provide a full-year forecast.
“While we face near-term uncertainty due to changing trade, tariffs and fiscal policies, we are focused on long-term growth and value creation,” the company said in a shareholder update on Wednesday.
Shares of the Austin, Texas-based company fell nearly 2.0 percent in extended trading.
The electric vehicle maker reported total revenue of $28.1 billion ($43.3 billion) for the third quarter ended Sept. 30, compared with analysts’ average estimate of $26.37 billion ($40.64 billion), according to data compiled by LSEG.
Earnings per share in the third quarter came in at 50 cents, below analysts’ forecasts of 55 cents.
Tesla reported gross margins of 18 percent, compared to estimates of 17.5 percent. Closely watched automotive gross margin, excluding regulatory credits, was 15.4 percent, compared to the average estimate of 15.6 percent, according to 19 analysts surveyed by Visible Alpha.
Tesla’s limited launch of its self-driving “robotaxis” service in Austin, Texas, earlier this year was a major strategic milestone that supported investors’ expectations that the company would shift its focus from pure vehicle sales to autonomous driving technology.
While most of Tesla’s current revenue still comes from vehicle sales, its US$1.45 trillion ($2.23 trillion) valuation largely reflects investors’ bets on robotics and artificial intelligence.
Tesla launched lower-cost “Standard” variants of its Model Y and Model 3 vehicles earlier this month as part of an increase in volume, cutting features and prices to make the vehicles more accessible after the expiration of the US tax credit for EV purchases.
The rush to receive federal stimulus in the US before it expires at the end of September resulted in the company delivering a record number of vehicles in the third quarter.
While Tesla hopes cheaper models will lead to higher volumes, analysts warn the move will squeeze margins as cost cuts of thousands of dollars per vehicle may not fully offset lower selling prices.
Wall Street expects Tesla’s deliveries to fall 8.5 percent in 2025 due to tax credit expiration, reliance on older models and increased competition. Tesla CEO Elon Musk’s embrace of right-wing politics has also alienated some potential buyers.
Tesla is counting on the launch of its low-cost standard versions to stimulate volume growth, but some analysts remain skeptical about a strong recovery as the cheaper version could eliminate sales of more profitable premium vehicles.
For years, Tesla has benefited from generating a meaningful additional revenue stream by selling regulatory credits to other automakers working to comply with emissions or zero-emission vehicle mandates.
This tailwind is fading fast. U.S. policy changes are expected to significantly reduce this revenue stream, and analysts now predict that revenue from highly profitable regulatory loans could fall significantly in coming quarters.
