Tesla earnings miss despite record third-quarter sales surge

Investors have largely bought into Musk’s vision, driving the shares up 8.7% so far this year

Tesla’s profit plunged more than expected as sharply rising costs undercut a record quarter of vehicle sales.

Adjusted earnings were 50 US cents a share in the period, down 31 per cent from a year ago, the company said on Wednesday (Oct 22). Analysts had expected 54 US cents on average in estimates compiled by Bloomberg. Revenue of US$28.1 billion beat expectations.

The results show the electric vehicle (EV) manufacturer is not immune to the rising costs that have buffeted the nation’s auto industry all year as US President Donald Trump radically overhauls policy. Operating expenses soared 50 per cent to US$3.4 billion in the quarter.

Chief executive officer Elon Musk is promising a future built around artificial intelligence (AI), humanoid robots and self-driving technology. Investors have largely bought into Musk’s vision, driving the shares up 8.7 per cent so far this year.

Questions remain, however, about the timeline to develop these businesses and the costs associated with building them out. Tesla’s central business of selling vehicles is also facing renewed scrutiny as competition intensifies and US fiscal incentives are phased out.

The shares slipped 1.7 per cent at 5.21 pm in extended trading in New York.

BT in your inbox

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

“The market’s realising Tesla trades like an AI platform, but reports like a carmaker,” said Haris Khurshid, chief investment officer at Karobaar Capital.

Tesla reiterated language from the previous quarter that it’s “difficult to measure” how shifting global trade and fiscal policies would impact its businesses and operations. The company sees results hinging on the broader economic environment as well as its speed in accelerating autonomy efforts and ramping up production for key products.

Analysts surveyed by Bloomberg expect Tesla to report a second year in a row of declining vehicle deliveries.

SEE ALSO

Record sales

Earlier this month, Tesla reported record third-quarter sales as customers rushed to take advantage of a US$7,500 US tax credit for EV purchases that expired Sep 30, delivering a temporary boost to the company’s core automotive business.

On Wednesday, Tesla reported US$417 million in revenue from regulatory credits it receives from other automakers that exceed emissions standards, only slightly below the previous quarter’s amount. Policy changes under the Trump administration have reduced demand for the credits. Tesla has said that it anticipated a decline in that business.

The release offered limited updates on key areas such as Tesla’s robotaxi business, which launched in Austin in June. The company also operates a rideshare service in the San Francisco Bay area, and it did not give an update on when it expects to run that business fully autonomously.

Free cash flow was nearly US$4 billion, up significantly from the previous year and well above the average analyst estimate of US$1.25 billion. BLOOMBERG