According to the Zhitong Finance APP, after experiencing two consecutive quarters of revenue decline, global electric vehicle leader Tesla (TSLA.US) announced its latest earnings report on the morning of October 23rd Beijing time, showing that the company's overall revenue in the third quarter exceeded expectations, growing by 12% to approximately $28.1 billion. However, Tesla's third-quarter profits fell short of Wall Street analysts' expectations, causing the company's stock price to drop nearly 5% in after-hours trading.
Some seasoned analysts believe that Tesla currently seems to lack a reliable growth narrative and plan, and the weak profits combined with the still vague narratives around artificial intelligence and humanoid robots make it difficult to support the current high valuation, which makes the company's stock price susceptible to rapid market adjustments and negative fundamental data.
The latest earnings data shows that Tesla's Q3 overall revenue increased by 12% year-on-year to $28.1 billion, surpassing the average expectation of about $26.3 billion from Wall Street analysts. However, the adjusted earnings per share were about $0.50, below the Wall Street average expectation of $0.54, and a significant year-on-year decline of 31%, compared to a 23% year-on-year decline in the second quarter. Tesla's free cash flow in the third quarter saw a rare significant increase—free cash flow approached $4 billion, a substantial increase of 46% compared to the previous year, far exceeding the average expectation of about $1.25 billion from Wall Street analysts.
The financial report data also shows that as U.S. President Donald Trump completely reformed economic growth and fiscal policy, this electric vehicle manufacturer was not immune to the severe impact of rising costs in the U.S. automotive industry throughout the year. Tesla's operating expenses in the third quarter surged by 50%, reaching an astonishing $3.4 billion, while the company estimated the negative impact of U.S. tariff policies to be about $400 million.
In terms of core business revenue, Tesla's financial report indicates that the company's automotive business revenue in the third quarter grew by about 6% year-on-year, rising from $20 billion in the same period last year to $21.2 billion in the third quarter.
Net profit under GAAP standards fell by 37% to $1.37 billion, equivalent to a GAAP earnings per share of $0.39; in contrast, the net profit in the same period last year was $2.17 billion, equivalent to earnings per share of $0.62. The significant decline in Tesla's profits reflects the drop in electric vehicle prices and a 50% surge in operating expenses, with the company stating that part of this increase also came from artificial intelligence and &#34;other R&amp;D projects.&#34;
The end of the quarter coincided with the expiration of the federal tax credit for electric vehicles, which was announced to be canceled alongside the spending bill led by President Trump. This prompted consumers to rush to purchase before the incentives disappeared, pulling some sales forward into the third quarter, which is why Tesla's third-quarter vehicle delivery data reached a historical high.
During the earnings call for the previous quarter in July, CEO Elon Musk and CFO Vaibhav Taneja reminded shareholders to pay attention to the impact of higher tariff costs and the expiration of tax credits.
In the third quarter, Tesla's quarterly revenue related to automotive regulatory credits unexpectedly fell by 44%, from $739 million to $417 million
Even with a return to overall growth, Tesla's third quarter was characterized by continued weak sales data in Europe, largely due to growing consumer resentment towards Musk, particularly regarding his provocative interventions in European politics and aggressive actions, as well as competition from electric vehicle manufacturers like Volkswagen and BYD.
Tesla's stock price fell sharply at the beginning of the year but has since rebounded significantly, especially with a 30% increase since September; currently, Tesla's stock price has risen nearly 9% year-to-date in 2025. However, this still lags behind the overall performance of the S&amp;P 500 index, the Nasdaq 100 index, and the seven major tech giants in the U.S., particularly far behind AI leaders like NVIDIA and Microsoft.
Earlier this month, Tesla reported a record third-quarter delivery of 497,099 vehicles; total production was 447,450 vehicles. However, in the first three quarters, deliveries were approximately 1.2 million vehicles, down about 6% compared to the same period in 2024.
Tesla also launched more affordable versions of its popular Model Y SUV and Model 3 sedan in early October. The company stated during its earnings call that the new product lineup makes its offerings &#34;more accessible to customers after the expiration of the electric vehicle tax credits in the U.S.&#34;
In the third quarter, the company's biggest growth engine came from its power generation and storage business, which saw revenue jump 44% to $3.42 billion. Tesla's energy product line includes large backup battery storage systems and solar photovoltaics for data centers and other facilities.
Musk's AI startup xAI, founded in 2023, has been the most important buyer of Tesla's energy products. Tesla stated in its 2024 annual report that xAI incurred expenses of approximately $198.3 million that year and is expected to incur $36.9 million before February 2025, most of which is for Tesla's Megapack series storage products.
The market shifts to a cautious stance regarding Musk's grand narrative of Tesla
During the earnings call, as Tesla's management provided scant guidance to investors, the stock price fell sharply; Musk reiterated his grand and futuristic vision for Tesla's development, as he has in previous earnings calls, emphasizing these futuristic points multiple times. However, this time the market seemed to lose patience, and after Musk's &#34;pie in the sky&#34; remarks, the stock price continued to decline in after-hours trading.
Garrett Nelson, a senior equity research analyst at Wall Street research firm CFRA, stated, &#34;We are entering a period filled with questions about Tesla's near-term and mid-term profit growth trajectory.&#34;
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251023/1761178142833572.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="1761178109(1).png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251023/1761178142833572.png"/>
One of the most concerning points is the slow progress of the company's fully autonomous driving system (FSD) based on its AI supercomputing system. Tesla's Chief Financial Officer Taneja stated that only 12% of Tesla's current fleet consists of customers paying for FSD Supervised (part of the automated driving system subscription).
Tesla did not provide specific performance metrics or production guidance in its shareholder letter or earnings call, but stated that it still aims to begin mass &#34;production&#34; of the Cybercab, heavy-duty electric Semi trucks, and the new battery storage system Megapack 3 in 2026. Musk expects the formal production of Robotaxi fully autonomous taxis—namely the Cybercab—to begin in the second quarter of next year.
The company stated that it is building the &#34;first generation production line&#34; for its heavily anticipated humanoid robot Optimus. Musk mentioned during the earnings call that the company expects to showcase Optimus V3 in the first quarter.
Tesla released its all-electric Semi truck in November 2017. Although the company has delivered some trucks to early customers, it still lists the Semi production line as &#34;under construction.&#34;
Tesla stated that compared to its commitment to deliver a certain number of electric vehicles and energy products by the end of the year, it is now &#34;difficult to measure the impact of changes in global trade and fiscal policy on the automotive and energy supply chains, our cost structure, and the demand for durable consumer goods and related services.&#34;
Tesla Vice President Lars Moravy mentioned during the earnings call that the company has built part of the production line, is still installing some equipment, and has a &#34;road validation fleet,&#34; but Tesla is still working on developing some autonomous driving systems for the Semi trucks.
Tesla did not commit to delivering a certain number of electric vehicles and energy products by the end of the year, but stated, &#34;It is difficult to measure the impact of changes in global trade and fiscal policy on the automotive and energy supply chains, our cost structure, and the demand for durable goods and related services.&#34;
Tesla stated that its Robotaxi fully autonomous taxi service in Austin (equipped with a safety driver) has expanded the &#34;service area and fleet size,&#34; and has launched the Robotaxi fully autonomous taxi service in the San Francisco Bay Area, having obtained testing permits in Arizona and Nevada. The company stated that it is collecting data to enable it to &#34;rapidly expand to other cities&#34; in the future using its so-called &#34;general artificial intelligence large model.&#34;
Musk mentioned during the earnings call that he expects Tesla to remove human safety drivers from the Austin Robotaxi fully autonomous vehicles this year, and stated that the company will operate this unmanned service in 8 to 10 metropolitan areas by the end of 2025. In new markets, Tesla initially plans to use safety drivers for at least three months.
Additionally, regarding Tesla's AI5 chip, Musk stated that Samsung and TSMC will jointly work on manufacturing the Tesla AI5 chip, and emphasized that Tesla's self-developed AI chips will not replace NVIDIA's AI computing clusters
After Tesla announced its earnings, Haris Khurshid, Chief Investment Officer of Karobaar Capital, stated: &#34;While some investors in the market and Musk's followers recognize that Tesla is like a comprehensive all-in-one artificial intelligence platform, the earnings report still reflects that it is an automotive manufacturer, and one that is in a declining channel.&#34;
Dec Mullarkey, Managing Director at SLC Management, remarked: &#34;There isn't much here to excite investors.&#34; &#34;Tesla's earnings and profit margins are still below average and may stagnate for a while. Currently, Tesla seems to lack a reliable growth narrative and plan, making its stock price susceptible to rapid market adjustments and negative performance data.&#34;
Wall Street still yearns for Tesla's &#34;long-term bull narrative&#34;
Dan Ives, a senior analyst at Wedbush known as the &#34;Tesla super bull,&#34; recently raised Tesla's target price significantly to $600 while maintaining an &#34;outperform&#34; rating. Ives' core logic is also based on future prospects rather than electric vehicle delivery volumes, primarily focusing on Tesla's accelerated development in artificial intelligence and the imminent key breakthroughs. As of Wednesday's market close, Tesla's stock price was $438.97, having previously reached an all-time high of $488.54 in December 2024.
Ives pointed out that the market severely underestimates Tesla's transformation potential—specifically, that the AI supercomputing-based FSD autonomous driving and robotics technology will become core strategic pillars by 2026, and Tesla's &#34;game-changing factors&#34; in AI and robotics will directly determine the company's future direction.
Ives' team estimates that the AI-based FSD autonomous driving sector alone will contribute at least $1 trillion in market value to Tesla, and during the remaining year of the Trump administration, Tesla's core projects surrounding FSD are expected to accelerate, as the federal regulatory &#34;web&#34; that has entangled the company for the past few years is anticipated to be dismantled more quickly. Ives' team believes that in a bull market scenario, Tesla's market value could reach $2 trillion by early 2026, and with the mass production of autonomous driving and robotics by the end of the year, it could further rise to $3 trillion.
As Tesla's &#34;Great Vision 4.0&#34; was released, Musk reiterated the strategic position of the robotics business within Tesla. He stated that the scaling of FSD and Optimus will be the most important matters, as approximately 80% of Tesla's future value will come from the Optimus humanoid robot.
Another Wall Street financial giant, Morgan Stanley, is also confident that the autonomous driving and robotics boom will be the core driving force behind Tesla's performance growth. A recent report from Morgan Stanley indicated that analysts concluded from discussions with institutional clients, corporate clients, and private wealth clients that physical artificial intelligence (Robotaxi, drones, humanoid robots) is &#34;breaking out.&#34; In Morgan Stanley's view, Tesla remains one of the highest-quality investment targets in the field of physical artificial intelligence
Tesla CEO Elon Musk keenly recognized the opportunities in physical artificial intelligence and robotics more than a decade ago. The Tesla Optimus humanoid robot will debut in 2024 and launch its third generation in 2025, completing multiple upgrades in just one year. In September this year, Musk revealed new details about Optimus V3 at the annual &#34;All-in Summit&#34;—the Optimus V3 robot is being designed to have &#34;human-level hand dexterity&#34; and is equipped with &#34;advanced artificial intelligence that can understand physical reality.&#34;
Tesla plans to begin mass production of the third generation humanoid robot Optimus in 2026. This plan broadens the commercial application prospects of humanoid robot technology and further consolidates Tesla's leading position in the fields of automation and robotics. Musk expects that by 2030, the annual production of Optimus humanoid robots will reach 1 million units

TSLL

07766

07366

TSLA

TSDD

TSLQ

09366

TSLR

Tesla's third-quarter report showed a 12% year-on-year revenue growth, reaching $28.1 billion, but earnings fell short of expectations, leading to a nearly 5% drop in stock price. Despite a significant increase in free cash flow, operating expenses also surged by 50%. Analysts believe that Tesla lacks a reliable growth narrative, and weak profits along with vague AI and robotics plans make its high valuation difficult to sustain

- Tesla reported a 12% year-over-year revenue increase in Q3, reaching approximately $28.1 billion, surpassing analyst expectations.  
- However, the company's earnings fell short of projections, leading to a nearly 5% drop in stock price post-announcement, amid concerns over its growth narrative and rising operational costs.  
- Despite record vehicle deliveries, Tesla faces challenges from increased competition and market skepticism regarding its future profitability and AI advancements.

Zhitong

Direxion Daily TSLA Bull 2X Shares

XL2CSOPTSLA

XI2CSOPTSLA

Tesla

GraniteShares 2x Short TSLA Daily ETF

AXS TSLA Bear Daily ETF

XI2CSOPTSLA-U

GraniteShares 2x Long TSLA Daily ETF

Elon Musk's "AI and Robotics Vision" Collides with Automotive Company Financial Reality: Tesla's Q3 Profit Drops Over 30%