Tesla Q3 revenue hits $28.1b, profit misses on higher AI costs

Tesla reported record Q3 revenue of US$28.1 billion, beating analyst expectations, driven by a surge in EV sales in the US as buyers rushed to secure tax credits before they expired.

The Austin-based company reported profit per share at 50 cents, below the 55 cents expected by analysts.

Tesla’s gross margin for the quarter was 18%, and automotive gross margin excluding regulatory credits was 15.4%.

Income from regulatory credits dropped to US$417 million, down from US$739 million year-on-year.

The company cited over US$400 million in quarterly costs from tariffs on auto-parts imports, and noted a 50% rise in operating expenses due to AI and research projects.

Tesla recently launched cheaper “Standard” variants of its Model Y and Model 3, reducing prices by US$5,000 to US$5,500 in an effort to boost demand.

Analysts warn that lower prices may pressure margins.

Tesla remains on track to start volume production of its robotaxi, Semi truck, and Megapack 3 battery in 2026.

🔗 Source: Reuters

🧠 Food for thought

Implications, context, and why it matters.

Texas robotaxi permit doesn’t allow driverless rides yet

Tesla holds a Texas transportation network company (TNC) license for statewide ride-hailing, but it does not authorize driverless service 1.
Starting September 1, 2025, companies need separate Department of Motor Vehicles (DMV) approval to run cars without a human driver, and Tesla has not received it 1.
In Austin, each ride still has a human safety monitor in the front passenger seat, so operations remain supervised rather than fully autonomous 1.
Musk has talked about service in eight to ten metro areas by year-end, yet permits in each place remain a hurdle, which makes that timeline look optimistic without visible progress 2.

Third parties can step into EV financing after federal tax credits expired

With federal EV tax credits gone, lenders and insurers can ease monthly costs with rate buydowns or longer terms. They might also offer deferred payments or bundled insurance.
Financial firms may stand out by giving clear, simple guidance on any remaining incentives, for example state or local rebates, then handling the application paperwork for buyers.
Auto marketplaces and comparison sites should build tools that surface models that hold up best without credits. These tools would highlight vehicles with manufacturer discounts, lower MSRP, or cheaper insurance, and flag any non-federal incentives that still apply.