(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)
By Jonathan Guilford
NEW YORK, Oct 23 (Reuters Breakingviews) - Tesla (TSLA.O) has blown past its last exit from a risky route. The electric-car maker posted better-than-expected results on Wednesday. Yet its best growth in years owes much to the impending expiry of customer subsidies in the United States, an industry-wide boon on which its rivals also capitalized. What remains is boss Elon Musk’s all-or-nothing bet on autonomy.
Third-quarter revenue of $28 billion came in 12% higher than last year and 6% above analysts’ expectations, according to Visible Alpha data. Tesla’s most important gauge - gross margin adjusted for sales of regulatory credits in its core automotive business - appears to have stabilized at 15.4% after a years-long slide. A 7% year-over-year bump in car deliveries represents the fastest growth since 2023. The worst, then, might seem to be over. Save for one thing: Tesla did little to drive this bumper quarter. Overall U.S. electric vehicle sales soared 30% year-over-year in the third quarter, Cox Automotive reckons, as buyers rushed to nab tax credits for battery-powered purchases before the Trump administration axed them. Musk’s rivals benefitted, too: Ford Motor (F.N) and General Motors (GM.N) further narrowed their gap to the market leader.
Moreover, profit tanked more than a third as operating expenses jumped 50%. Meanwhile, the long-awaited release of new, “affordable” cars was little more than a slight price cut on existing models that does little to expand the market.
In that case, while Tesla’s nadir may have passed, so too may its peak, at least as far as the humdrum business of “selling cars” is concerned. It’s perhaps no surprise. The company once aimed to shift 20 million cars a year. A new proposed pay package for Musk has effectively ditched that, rewarding him with billions if he reaches that many sales since Tesla’s founding.
Admittedly impressive growth in the company’s other businesses, selling grid-scale batteries and services to drivers, isn’t enough to support its $1.4 trillion valuation. The remainder is, as always, Musk’s grandest plans: turning every car into an automated chauffeur, and deploying the humanoid Optimus into factories - though his talk on Wednesday of building a “robot army” over which he should exert influence will send some chills.
Some of those visions are getting less outlandish, though. Alphabet’s (GOOGL.O) Waymo has a robo-taxi business in operation right now. General Motors, earlier on Wednesday, said it would release its own “eyes-off” system in 2028. The difference is in approach. Rivals augment in-car cameras with LiDAR or radar, utilizing extra sensors - at extra cost - to navigate the road. Musk has stubbornly stuck to a cheaper, cameras-only approach.
This is a difficult technological nut to crack, though the CEO said in a call with investors that Tesla taxis should soon operate without any humans at the steering wheel. In fact, he boasts that production will ramp up in anticipation of an autonomous future. At this point, he needs to be right. All other options are disappearing in the rear-view mirror. Follow Jonathan Guilford on X and LinkedIn.
<h3>CONTEXT NEWS</h3>
Automaker Tesla said on October 22 that it generated roughly $28.1 billion in revenue for the third quarter of 2025, roughly 6% above analysts’ expectations, according to Visible Alpha data.
Revenue from the company’s core automotive business came in 7% above estimates, at $21.2 billion. Excluding sales of regulatory emissions credits, the unit’s gross margin reached 15.4%, versus an anticipated 14.9% and continuing its climb from a low point at the beginning of the year.
GM and Ford are catching up to Tesla in US EV sales
<img src="https://imageproxy.pbkrs.com/https://www.reuters.com/graphics/BRV-BRV/BRV-BRV/lgvdaraywpo/chart.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" width="1420" height="928" original-src="https://imageproxy.pbkrs.com/https://www.reuters.com/graphics/BRV-BRV/BRV-BRV/lgvdaraywpo/chart.png"/>
(Editing by Antony Currie; Production by Aditya Srivastav)

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Tesla reported third-quarter revenue of $28 billion, exceeding expectations, but its growth is largely due to expiring U.S. customer subsidies. Despite a 7% increase in car deliveries, profit fell over a third as operating expenses surged. CEO Elon Musk's focus on autonomy remains, but rivals like Ford and GM are closing the gap. Tesla's valuation of $1.4 trillion is challenged by its reliance on ambitious future plans rather than current sales performance. Musk's strategy of a camera-only approach to autonomy faces significant technological hurdles.

- Tesla reported third-quarter revenue of $28 billion, exceeding expectations, largely due to a surge in U.S. electric vehicle sales driven by expiring customer subsidies.  
- Despite this growth, Tesla's profit fell over a third as operating expenses rose significantly, and its new vehicle offerings were minimal.  
- CEO Elon Musk's focus on autonomy remains critical, as competitors are advancing in technology, and Tesla's valuation may not be sustainable without substantial innovation.

BREAKINGVIEWS-Elon Musk speeds past last exit from risky route