Tesla profits slide despite record revenue
Tesla saw its profits fall even as it reported record quarterly revenue after U.S. buyers rushed to secure a key tax credit on electric car purchases before the end of last month.
The company said its revenue for the three months to the end of September hit a record $28 billion (£21 billion), up 12% on the same period last year.
But the company’s profits fell 37% over the same period, in part because of additional costs related to pricing and research.
The results come ahead of a shareholder vote in November on a new pay package for Chief Executive Elon Musk, which could be worth as much as $1 trillion.
Tesla shares fell about 3.8% in extended trading after the results were announced.
The company’s market valuation of around $1.4 billion has been driven in recent months by investor confidence in Elon Musk’s ability to realize his ambitions to transform Tesla into a global leader in artificial intelligence (AI) and robotics.
But the sale of vehicles currently remains its main source of income during the development of these new products.
Like other automakers around the world, Tesla faces tough competition from Chinese rivals such as BYD.
Tesla reversed a streak of falling quarterly sales as U.S. buyers rushed to claim federal tax credits of up to $7,500 before they expire at the end of September. But competitors like Ford and Hyundai reported even stronger U.S. sales growth during the same period.
During the quarter, Tesla launched a six-seat version of its best-selling Model Y vehicle, which was particularly successful in China.
It also offered incentives to attract buyers, such as five-year interest-free loans and insurance subsidies.
Tesla is also struggling with taxes imposed on imports of auto parts and raw materials by US President Donald Trump.
In an investor call Wednesday, Tesla Chief Financial Officer Vaibhav Taneja said the tariffs cost the company more than $400 million in the most recent quarter.
Higher spending on research and development, particularly in its AI initiatives, also weighed on Tesla’s profits.
Mr Taneja said he expected this type of spending to continue to rise.
In October, Tesla unveiled cheaper models of two of its best-selling cars in the United States, aiming to increase sales as federal incentives expire.
The company has launched new versions of its Model Y and Model 3 cars, priced about $5,000 less than previous versions.
Still, Tesla shares fell as investors became disappointed with the new cars.
The company has been criticized for being slow to offer more affordable cars, often seen as a reason it has lost ground to competitors.
