Tesla Reports Record $28B Q3 Revenue Amid 37% Profit Decline Driven by Rising Costs, $400M Tariffs

Tesla reported record third-quarter revenue of $28.1 billion, surpassing Wall Street estimates due to a surge in US electric vehicle sales ahead of the federal tax credit expiration. Despite this strong revenue, profits fell 37% year-over-year to $1.4 billion, missing analyst expectations, largely due to increased operating expenses driven by tariffs, higher research and development costs in robotics and AI, and a sharp decline in income from regulatory credits influenced by new Trump administration legislation. Tariffs alone cost Tesla over $400 million in the quarter, and operating expenses rose 50%, including stock-based compensation and restructuring costs. To sustain demand amid potential market softness, Tesla introduced lower-priced "Standard" versions of its Model Y and Model 3, though analysts warn this could further compress margins. CEO Elon Musk emphasized ongoing investments in autonomous technologies, robotics, and AI, with new product launches like the Cybercab robotaxi, Semi truck, and Optimus humanoid robot planned for 2026, underscoring Tesla's pivot toward innovation beyond vehicles. Investor sentiment remains cautiously optimistic about Musk's long-term vision despite near-term profitability challenges and uncertainty from shifting trade and fiscal policies.