Quarterly Profit Miss Sparks Investor Concern
Tesla shares dropped nearly **4%** in early Frankfurt trading on Thursday after the company's latest quarterly profit figures missed analyst expectations, driven primarily by higher tariffs, increased research costs, and a decrease in regulatory credit income[1][5]. This marks a continuation of a challenging year for Tesla’s stock in Europe, down around **10%** in Frankfurt for 2025, in contrast to an **8.7% rise** in New York[1].
Record Sales and Surging Revenues Offer Mixed Signals
Despite the profit miss, Tesla achieved its **highest quarterly sales** for electric vehicles to date, propelling revenues past expectations[1][4]. The spike was fueled by U.S. buyers rushing to secure a $7,500 federal **EV tax credit** before its expiration on October 1, which may have **shifted demand** from future quarters[2][4].
- Third-quarter revenues: $28.1 billion (up from $25.2 billion a year ago)
- Quarterly profit: Fell 37% to $1.4 billion, marking a fourth straight quarterly decline
- Adjusted earnings per share: $0.50, below the $0.54 expected by analysts[4]
- Gross margin: 18%, highest in 2025 but still below historical levels
Tesla's expansion in its **battery storage** and electric charging businesses also buoyed revenue, but electric vehicles remain the core driver of earnings[2].
CEO Musk Shifts Focus Toward Diversification and Automation
On a conference call with investors, CEO **Elon Musk** tried to redirect attention from vehicle sales to Tesla’s broader ambitions. Among the highlights:
- Musk touted Tesla’s **robotaxi service**, and expressed confidence that safety monitors could soon be removed from the driver seat in Texas, expanding to up to ten additional metro areas by year-end.
- He promoted Tesla’s *AI product* and predicted a surge in demand for the company’s **Optimus robots** for homes and factories, calling them likely to become “the biggest product of all time.”
For more on AI-driven products like robotaxi or Optimus, explore the
ChatGPT application.
Mixed Outlook Amid Uncertain EV Demand and Competitive Pressures
The expiration of federal tax credits and increased competition have clouded Tesla’s near-term prospects. Tesla’s strategy to offer cheaper versions of the Model Y and Model X failed to impress investors, as their prices remained above expectations—slightly below $40,000. Analysts remain cautious regarding sustained demand for Tesla EVs and the impact of Musk’s public persona and political affiliations on sales[2].
Analyst Views and Shareholder Reactions
- While some analysts praised Tesla’s diversification efforts, the primary concern remains **demand for EVs** going forward.
- “There’s a lot of uncertainty,” commented Garrett Nelson of CFRA Research[2].
- However, others like Brian Mulberry at Zacks Investment Management noted, “There is still strong demand for Teslas.”[2]
Conclusion
Tesla’s latest earnings report highlights ongoing challenges in profitability and demand, offset by robust sales and revenue growth. The firm’s increasing focus on automation and AI, including products backed by technologies similar to
ChatGPT, signals a strategic pivot as it seeks resilience amid evolving market and regulatory pressures.
However, others like Brian Mulberry at Zacks Investment Management noted, “There is still strong demand for Teslas.”[2]
However, others like Brian Mulberry at Zacks Investment Management noted, “There is still strong demand for Teslas.”[2]
