Tesla's Q3 2025 earnings call, outlining new AI initiatives and defending proposed Elon Musk's $1 trillion compensation plan. Image credit: Shop4Tesla.
(The Post News)– Tesla Inc. (NASDAQ: TSLA) reported mixed third-quarter numbers on Wednesday, beating revenue estimates but falling short of profit projections as higher costs, tariffs, and reduced margins dented the bottom line.
Tesla’s Q3 revenue increased 12% year-on-year to $28.01 billion, higher than Wall Street’s $26.27 billion expectation. Adjusted earnings per share, however, fell to $0.50, lower than the expected $0.54. Operating profit fell 40% to $1.62 billion as tariffs and costs inflated.
The company credited softer regulation, credit revenue, and higher average vehicle costs. Tesla reported that tariffs added more than $400 million to the total cost of its vehicles and energy companies in Q3.
Tesla’s stock fell 4.5% in after-hours trading after the report and accounted for the loss during the earnings call.
Musk Reaffirms Tesla’s AI and Self-Driving Vision
CEO Elon Musk opened the call by speaking of Tesla’s artificial intelligence and autonomy-powered next stage of growth. “We’re at the tipping point of getting AI out into the real world,” Musk asserted. “Tesla is, by far, the leader in this real-world AI.”
Musk said Tesla is “100% sure” it can have unsupervised full self-driving (FSD) with safety well beyond human levels. He claimed that billions of Teslas on the planet might be made autonomous with a software update.
Musk also stated that Austin robotaxis would start operating without safety drivers toward the end of the year and would be focused on expanding to eight to ten U.S. metro areas, including Florida, Nevada, and Arizona.
Tesla’s Q3 delivery record of 497,099 was just before the September 30 expiration of the U.S. federal electric vehicle tax credit. It produced more than 447,000 vehicles and 12.5 gigawatt-hours of energy storage capacity, both of them being record highs.
Demand peakedas buyers rushed to buy before the incentives expired. Tesla has launched more affordable “standard” Model 3 and Model Y models, at $36,990 and $39,990, respectively, in an attempt to address affordability concerns. Analysts had warned that post-tax-credit times might soften Q4 volumes, challenging Tesla’s price elasticity and delivery cadence.
Musk also gave a report about Tesla’s human-like robot, Optimus, whose second model was to be rolled out in February or March 2026. “It won’t even look like a robot; it will look like a human wearing a robot suit,” Musk explained.
He asserted that increasing the production volume is still difficult since there is no supply chain for humanoid robots. Tesla will have a production facility with the ability to produce one million units of Optimus by the end of 2026. The firm also described its vision for its AI5 autonomous chip, which it has been developing with Samsung and TSMC. The new chip will be 40 times more powerful than Tesla’s current AI4 chip, Musk further added.
“Our goal is to have a surplus of AI5 chips to enable autonomy and robotics,” he further added. Tesla CFO Vaibhav Taneja discussed the company’s “headwinds” from tariffs and rising EV competition. He estimated tariff costs at over $400 million in Q3.
Even though Tesla’s Shanghai Gigafactory helped counter U.S. tariffs, the company reported a 40% drop in operating income. Tesla cited rising input costs, rising freight costs, and shifting global trade policies as ongoing risks.
Musk’s $1 Trillion Pay Package Backlash
Later in the call, Musk defended his controversial $1 trillion pay package, which goes to a shareholder vote on the 6th of November. CFO Taneja urged shareholders to vote for the package since it aligns Musk’s incentives with Tesla’s long-term strategy.
Musk branded proxy advisory companies ISS and Glass Lewis, who had suggested voting down the plan, as “corporate terrorists.” “They made terrible recommendations that would have killed Tesla’s future,” Musk stated.
Musk’s previous $55 billion pay package was rejected by a Delaware court in 2024. The new one ties payments to 10-year targets for EV, robotaxi, and robotics performance. Margin troubles aside, some bulls remain hopeful. Wedbush’s Dan Ives maintains a $600 price target, calling Tesla’s AI ambitions a potential “1 trillion valuation unlock.”
Tesla stock technically finds support at $414.98 now. Breakout will target $488.72, but gentler profits could trigger another correction. While Tesla sails through a post-tax-credit world, investors will be watching to see whether Musk’s AI and autonomy vision can keep the EV leader afloat through tougher economic waters.
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