Tesla reported record quarterly revenue but missed Wall Street profit expectations for the third quarter of 2025, as the electric carmaker faced shrinking margins amid ongoing price cuts and reduced regulatory credit income.
The company said late Wednesday that it earned $0.50 per share (non-GAAP) in the third quarter, below analysts’ consensus estimate of $0.55. Revenue came in above expectations at $28.1 billion, compared with Wall Street’s projection of $26.5 billion. Despite achieving its highest-ever quarterly sales, Tesla’s operating income fell 40% year-on-year, while its gross margin dropped to 18% from 19.8% a year earlier.
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Tesla attributed the weaker profitability to lower vehicle pricing across its lineup and a reduction in regulatory credits, which have previously supported earnings. Analysts said the results underscored the impact of Tesla’s aggressive pricing strategy amid intensifying competition in the global EV market.
The automaker’s capital expenditure also declined year-over-year, suggesting reduced near-term investment. However, Tesla strengthened its cash reserves, which rose to $41.6 billion by the end of the quarter.
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The third quarter was expected to show strong delivery figures, with demand in the United States boosted by customers advancing purchases ahead of the expiration of federal tax credits for electric vehicles. While the revenue growth met expectations, analysts said the erosion of margins points to the challenges Tesla faces balancing growth with profitability.
Here is Tesla’s full Q3 2025 Shareholder Presentation:
Here is Tesla’s conference call for the Q3 2025 results: