(qlmbusinessnews.com . Thu 23rd Oct, 2025) London, UK —
Tesla Stock Falters After Hours as Profits Drop 37% Despite Sales Surge
Tesla has witnessed a decline in profits despite achieving a record quarterly revenue, propelled by US consumers accelerating their electric vehicle purchases to benefit from an expiring tax incentive.
The company announced that for the quarter ending September, it achieved an unprecedented revenue of £21bn, marking a 12% increase compared to the same period last year. However, its profits took a 37% hit in the same timeframe, attributed in part to additional costs related to tariffs and research.
This financial revelation precedes a crucial shareholder vote set for November, regarding a potentially £1tn compensation package for CEO Elon Musk.
Following the announcement, Tesla's shares dipped by approximately 3.8% in after-hours trading. The automaker's stock market value, approaching £1.4tn, has largely been fuelled by investor confidence in Musk’s vision to position Tesla at the forefront of artificial intelligence (AI) and robotics. Yet, vehicle sales continue to be the company's primary revenue source as it develops these new technologies.
Tesla faces stiff competition globally, notably from Chinese manufacturers such as BYD, amidst a fiercely competitive market.
The company managed to reverse a downward trend in quarterly sales, spurred by American consumers keen to avail of federal tax benefits of up to $7,500, which concluded in September. However, competitors including Ford and Hyundai reported even more substantial growth in US sales during this window.
Tesla launched a six-seater variant of its popular Model Y in the quarter, which found considerable success in China, alongside incentives such as five-year, interest-free loans and insurance subsidies to attract customers.
Additionally, Tesla has contended with tariffs on imported car parts and raw materials, a policy enacted by former US President Donald Trump, costing the company over $400m in the last quarter alone. Vaibhav Taneja, Tesla's finance chief, highlighted these tariffs and high research and development expenses, especially in AI, as significant factors impacting profits, with expectations of further increases in such expenditures.
In an effort to boost sales following the expiration of federal incentives, Tesla in October introduced more affordably priced versions of its Model Y and Model 3 vehicles in the US, shaving around $5,000 off earlier models' prices. Nevertheless, the market's response was lukewarm, with shares falling after the announcement.
Criticism has been levelled at Tesla for its sluggish pace in offering more competitively priced vehicles, a factor perceived as contributing to its erosion of market share to rivals.
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