Tesla Inc. delivered its third-quarter earnings this week—an event that drew massive attention from the Tesla investor relations community and global markets. While the company’s revenue rose 12% year-on-year to $28.1 billion, breaking a two-quarter decline streak, profits slipped sharply. The latest Tesla earnings call revealed that despite growth in sales, the electric vehicle maker’s net income fell 37% from a year earlier.
Why Tesla’s Profits Took a Hit
Several factors weighed on Tesla earnings this quarter. The company continued to slash vehicle prices globally to tackle competition from fast-growing Chinese EV manufacturers, while its operating expenses surged 50%. A large part of this increase came from heavy investments in AI, robotics, and other R&D projects.
Even with rising revenue, investors remained cautious. Following the Tesla earnings report, Tesla stock price saw a 3.6% fall in extended trading on Wednesday.
Key Takeaways from the Tesla Earnings Call
During the Tesla Q3 2025 earnings call, Chief Financial Officer Vaibhav Taneja disclosed that tariffs cost the company over $400 million in the quarter. He also confirmed that expenses related to AI and research development would continue to grow, impacting short-term margins but supporting Tesla’s long-term innovation goals.
Taneja addressed criticism that the automaker must move faster in developing affordable EV models, a factor that has allowed competitors to capture more market share.
Elon Musk’s Fiery Moments During the Call
The Tesla earnings call wasn’t just about numbers—it was about Elon Musk’s vision. The world’s richest man used the moment to defend his $1 trillion pay package proposal, which shareholders will vote on at Tesla’s annual meeting on November 6 in Austin. Musk called out shareholder advisory groups Glass Lewis and ISS, labeling them “corporate terrorists” for opposing the package.
He also demanded stronger voting control in Tesla, linking it to his ambitious plans for the company’s future, particularly around AI projects like the humanoid robot Optimus. Musk claimed Optimus could become “the biggest product of all time,” capable of solving global issues like poverty and healthcare shortages.
Tesla’s Self-Driving and Robotaxi Vision
Alongside AI, Tesla continues pushing boundaries in autonomous vehicle technology. Musk confirmed plans to launch self-driving robo-taxis by the end of this year, operating without Tesla employees as safety riders. The company aims to roll out these services in 8–10 U.S. metro areas soon after.
Still, Tesla faces stiff competition from Waymo, Google’s parent company’s self-driving division, which already has millions of fully autonomous rides across the U.S., Japan, and the U.K.
Tesla Earnings Breakdown
- Revenue: $28.1 billion, up 12% year-on-year
- Net income: Down 37%
- Earnings per share (EPS): 39 cents
- Gross profit margin: 18%, down 1.85 points from last year
- Free cash flow: Increased 46% to $4 billion
- Cash reserves: $41.6 billion
- Tesla stock price: Trading at approximately 280x annualized profits post-earnings
Tesla Share Price and Market Outlook
Despite the short-term hit in profitability, Tesla stock remains attractive to long-term investors betting on the company’s AI and self-driving future. Over the last six months, Tesla share price has surged 84%, fueled by optimism around full self-driving software updates and the growing hype surrounding $Tesla’s future products.
The next major update for markets—and potential volatility trigger—will be the Tesla earnings date for the fourth quarter, expected in early 2026. Until then, analysts will closely watch Tesla’s R&D spending, global production numbers, and delivery targets to gauge momentum.
As a 2 lines summary — Tesla’s Q3 2025 earnings showed strong revenue growth but a significant drop in profits due to higher costs and price cuts. Investors remain cautious, while Elon Musk remains confident in Tesla’s long-term vision focused on AI and self-driving technology.