Tesla delivered a record number of vehicles in the third quarter of 2025, thanks in large part to a rush of customers in the United States who took advantage of the expiring federal EV tax credit. But that record quarter did not lead to greater earnings. In fact, Teslaโs third-quarter profit was still 37% lower than it was in the same quarter last year.
Tesla shipped 497,099 cars in the third quarter, which generated $21.2 billion in automotive revenue โ the companyโs best revenue figure in more than a year. But Tesla only pulled in a profit of $1.4 billion, up just $200 million from the second quarter of this year, according to a shareholder letter released Wednesday. The record quarter came after an abysmal start to the year for Tesla, which saw sales drop mightily in part because of CEO Elon Muskโs involvement with the Trump administration.
The company explained in the letter that a big increase in operating expenses โ 50% higher compared to the third quarter last year โ was one of the culprits. That operating expense bump was thanks to spending on AI and other R&D projects, as well as โrestructuringโ charges of nearly $240 million. Tesla didnโt explain what those restructuring charges were for, but itโs possibly related to the recent decision to shut down the companyโs six-year Dojo supercomputer project.
Tesla cited tariffs as another drag on profits this past quarter, meaning Musk spent around $300 million to help elect has hurt the companyโs business. Teslaโs chief financial officer Vaibhav Taneja said on a conference call Wednesday the tariff hit was about $400 million.
โWeโre at a critical inflection point for Tesla and our strategy going forward as we bring AI into the real world,โ Musk said on the call. Tesla is at the โbeginning of scaling, quite massively, Full Self-Driving and Robotaxi, and fundamentally changing the nature of transport,โ he said.
All of this will put even more pressure on the companyโs final quarter of the year.
Tesla already needs another record quarter (and then some) if it wants to simply match the number of cars it shipped in 2024 or 2023. The company could get some help from the new slightly-cheaper stripped-down versions of the Model 3 and Model Y EVs. But even in that best-case scenario, Tesla is way off the path of 50% year-over-year growth that it once promised to investors and shareholders.
Techcrunch event
San Francisco
|
October 27-29, 2025
But Musk has spent the last few years trying to get shareholders, investors, employees, and everyone else to look beyond the companyโs core business of making and selling cars. Heโs bet the future of Tesla on being able to create a vast network of self-driving vehicles that he thinks can challenge Uber. And he thinks the humanoid robot, Optimus, will become the best-selling product ever.
Tesla offered little new info on those programs in Wednesdayโs letter. Musk said on the conference call that Tesla may start building the third version of Optimus in the first quarter of 2026. He had once promised to build thousands of the robots by the end of this year, but as The Information has reported, Tesla has run into problems in early production with Optimus.
โBringing Optimus to market is an incredibly difficult task, to be clear. Itโs not like some walk in the park,โ Musk said.
But Musk continued Teslaโs gauzy, unspecific claims about how much Optimus will change the world. โYou can actually create a world where there is no poverty, where everyone has access to the finest medical care,โ he said. โOptimus will be an incredible surgeon.โ
The increased focus on AI, robotics, and self-driving cars will also cost Tesla more next year. Taneja said capital expenditures will increase โsubstantiallyโ in 2026 thanks to those projects. He also said Tesla has had to increase employee-related spending to stay competitive in the ongoing AI talent war.
Teslaโs third-quarter results come amid the backdrop of the companyโs proposal to hand $1 trillion worth of shares to Musk. That plan is up for a vote at the Teslaโs annual shareholder meeting in a few weeks. The company โ and Musk โ are campaigning hard. While advisor groups like ISS and Glass Lewis are recommending against the pay package, itโs most likely going to pass given the overwhelming support from shareholders on previous efforts.
That hasnโt stopped Musk from threatening to walk away from Tesla if the package isnโt approved.
This story has been updated with new information from Teslaโs third-quarter conference call.
