Tech
Tesla reports revenue growth after two down quarters. Why the stock is falling
Published Wed, Oct 22 202512:00 PM EDTUpdated 21 Min Ago
Lora Kolodny @in/lorakolodny/
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Key Points
- Tesla said revenue in the third quarter increased 12% to $28.1 billion.
- The company reported year-over-year revenue declines in each of the prior two quarters.
- Earnings missed estimates as capital expenditures jumped.
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Tesla reported a 12% increase in third quarter revenue on Wednesday following two straight periods of declines. However, earnings missed analyst estimates, pushing the stock down almost 5% in extended trading.
Here’s how the company did compared with estimates from analysts polled by LSEG:
- Earnings per share: 50 cents adjusted vs. 54 cents estimated
- Revenue: $28.10 billion vs. $26.37 billion estimated
Total revenue climbed from $25.18 billion a year earlier. Automotive revenue increased 6% to $21.2 billion from $20 billion in the year-ago period, Tesla said.
Net income fell 37% to $1.37 billion, or 39 cents per share, from $2.17 billion, or 62 cents per share a year earlier. The profit drop reflected lower EV prices and a 50% increase in operating expenses, which the company said was in part due to artificial intelligence and “other R&D projects.”
The end of the quarter coincided with the expiration of federal tax credits for electric vehicles, which were eliminated with President Donald Trump’s spending bill. That pulled sales forward into the quarter as as consumers rushed to take advantage of the incentive before it went away.
On Tesla’s last earnings call in July, CEO Elon Musk and finance chief Vaibhav Taneja warned shareholders about the impact of higher tariff costs and the expiration of the tax credits.
Revenue from automotive regulatory credits in the quarter fell 44% to $417 million from $739 million.
Even with the return to overall growth, Tesla’s third quarter was marked by a continuing sales slump in Europe, driven partly by consumer backlash against Musk, his incendiary political rhetoric and activism, as well by competition from EV makers like Volkswagen and BYD.
The stock, which plummeted to start the year, has rallied back and is now up almost 9% in 2025. That still trails major indexes and most of its megacap peers.
The shares dipped over the course of the earnings call on Wednesday as executives offered very little guidance for investors to consider, with Musk instead repeating his grand futuristic visions. Of notable concern is the slow progress of the company’s Full Self Driving system. Taneja said that customers paying for FSD Supervised, its partially automated system, account for only 12% of Tesla’s current fleet.
Tesla didn’t give volume-specific guidance in its shareholder deck, but said it’s still aiming to start “volume production” of the Cybercab, heavy duty electric Semi trucks and new, battery energy storage system, called Megapack 3, in 2026.
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The company said it’s now building out “first generation production lines” for the company’s humanoid Optimus robots. Musk said on the earnings call that that the company expects to show its Optimus V3 in the first quarter.
Tesla unveiled its fully electric Semi in November 2017. While the company has delivered some of these trucks to early customers, it still lists Semi production lines as “under construction.”
Instead of promising to deliver a certain number of EVs and energy products by the end of the year, Tesla said, “It is difficult to measure the impacts of shifting global trade and fiscal policies on the automotive and energy supply chains, our cost structure and demand for durable goods and related services.”
Tesla said it grew its “service area and fleet count” for its Robotaxi service in Austin, which involves safety drivers on board, and launched its Bay Area ride-hailing service. The company said it’s obtaining data that will allow it to “quickly scale to other cities in the future” with what it’s calling a “universal model.”
Earlier this month, Tesla reported deliveries of 497,099 vehicles for the third quarter, a record, on total production of 447,450 vehicles. However, through the first three quarters, deliveries stood at around 1.2 million, down about 6% compared to the same period of 2024.
Tesla also debuted more affordable versions of its popular Model Y SUV and Model 3 sedan in early October. The company said on Wednesday that the new offerings make “our products more accessible to customers in the wake of the expiration of the EV tax credit in the U.S.”
The company’s biggest growth engine in the quarter was its energy generation and storage business, which saw revenue jump 44% to $3.42 billion. Tesla’s energy products include large backup batteries and solar photovoltaics that can power datacenters and other facilities.
Musk’s AI startup xAI, which he started in 2023, has been a big buyer of Tesla’s energy products. In its 2024 annual report, Tesla said xAI incurred expenses of about $198.3 million for the year and $36.9 million through February of 2025. Most of that was for Tesla’s Megapack products.
WATCH: Tesla reports revenue beat
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VIDEO01:58
Tesla reports revenue growth after two down quarters in a row
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