In the third quarter of 2025, Tesla reported revenue of $28.095 billion, up 12% year over year, exceeding market expectations of $26.36 billion.

However, non-GAAP adjusted EPS came in at $0.50, a 31% decline from a year earlier, and below expectations of $0.54.

Tesla’s gross margin was 18%, slightly above the market estimate of 17.2%.

By segment, automotive revenue reached $21.205 billion, up 6% year over year. Excluding regulatory credit sales, the automotive gross margin stood at 15.4%, missing forecasts of 16.3%.

Revenue from energy generation and storage surged 44% to $3.415 billion in Q3.

Tesla said that the decline in emissions credit revenue, rising costs due to U.S. tariffs, and heavy investments in robotics and artificial intelligence all eroded its profit margins, resulting in EPS missing estimates.

Operating expenses rose 50% in the quarter to $3.4 billion, as Tesla spent aggressively on advanced Nvidia chips to power its AI ambitions.

Elon Musk is repositioning Tesla toward autonomous driving, preparing to launch robotaxis and humanoid robots. These initiatives require significant capital spending but are difficult to monetize in the short term, putting pressure on profit margins.

Tesla’s shares fell nearly 4% in after-hours trading following the report.

Due to strong demand ahead of the expiration of U.S. EV tax credits at the end of September, Tesla delivered a record 497,099 vehicles in the three months ended September 30.

However, this likely came at the expense of fourth-quarter deliveries. In addition, the ongoing trade war sharply increased the costs of rare mineral procurement and vehicle exports, further weighing on profitability.

Tesla’s regulatory credit revenue—its so-called “carbon credit” sales—continued to decline, hitting a two-year low of $417 million in Q3, down 5% from Q2 and marking five consecutive quarterly drops.

Analysts expect this source of revenue to fall further under the Trump administration, which is unlikely to expand green incentives.

Meanwhile, Tesla is lobbying ahead of its annual shareholder meeting on November 6, where investors will vote on a $1 trillion compensation package for Elon Musk — a proposal the board argues is essential for motivation and retention.