Tesla reported record quarterly revenue overnight, but its earnings fell short of analyst expectations and declined compared to the same period last year.
The company posted an adjusted income of US$1.8 billion (A$2.77 billion) for the third quarter, marking a 29 percent drop year-on-year. Despite the decline, it was still Tesla’s strongest quarter of 2025 so far.
The fall in earnings came even as Tesla recorded record sales of nearly 500,000 vehicles during the quarter, driven largely by a surge in demand from American consumers rushing to purchase electric cars before a US$7,500 (A$11,558) federal tax credit expired on 1st of October .
However, analysts expect electric vehicle (EV) sales in the U.S. to plunge in the fourth quarter, as many customers who would have bought cars later in the year made early purchases to take advantage of the tax incentive. The loss of the tax credit is expected to reduce demand among U.S. buyers going forward.
The U.S. remains Tesla’s largest market, accounting for nearly half of its total revenue.
At the same time, Tesla is facing mounting competition in the global EV market, particularly from Chinese automakers. Companies such as BYD, which dominates China’s domestic market and is rapidly expanding into Europe, are challenging Tesla’s global leadership.
BYD is on track to overtake Tesla as the world’s top EV seller this year — despite not selling any cars in the U.S.
Tesla’s global sales fell 13 percent in the first half of 2025, compared to the same period last year, as a result of both rising competition and backlash over CEO Elon Musk’s political activity.
