Tesla Q3 preview: Robotaxi, AI ambitions on the agenda following high-water mark in sales
Tesla (TSLA) stock went on a tear to end the third quarter, erasing early 2025 losses as investors bet on the firm’s AI-related ambitions. A strong sales quarter and a detente between CEO Elon Musk and former BFF President Trump also helped, but the question remains whether Tesla’s sky-high valuation will continue to defy gravity.
Tesla’s Q3 earnings report, slated for release on Wednesday after the bell, comes with the S&P 500 (^GSPC) and Nasdaq (^IXIC) within striking distance of new highs. The broader market has shaken off Trump’s unpredictable tariff war, though fears of an economic slowdown in the US persist. Plus, auto sector tariffs of 25% on imported cars and parts still are still in place, hurting domestic automakers.
The focus for Tesla is what happens as a result of the expiration of the federal EV tax credit and the company’s robotaxi ambitions.
For the quarter, Tesla is expected to report Q3 revenue of $26.27 billion, (per Bloomberg estimates), a 4% jump from the $25.18 billion reported a year ago. From a profitability standpoint, the Street is expecting adjusted EPS of $0.53, translating to EBITDA of $3.78 billion.
That big revenue estimate comes after the automaker’s record sales quarter. Tesla said Q3 deliveries came in at 497,099, easily topping Bloomberg consensus estimates of around 439,800 and the 462,890 units delivered a year ago. Tesla said Q3’s total was a new quarterly record for the company. The company also deployed a record 12.5 gigawatt-hours of energy storage products.
However, the sales surge came before the expiry of US federal EV tax credit on Sept. 30, the last day of the quarter. Even Tesla believes the company could be in for a tough time after expiration.
Musk warned after Q2 earnings that Tesla was in for a “few rough quarters” after EV tax credits expired.
One of the moves Tesla made earlier in October to address affordability was the introduction of a stripped-down “Standard” version of its Model Y and Model 3 sedans. Both models feature rear-wheel drive, smaller batteries, less-powerful motors, and the deletion of some creature comforts. The two cars cost $39,990 and $36,990, respectively.
What Tesla says about next steps for its Robotaxi game plan are crucial.
Tesla launched its first robotaxi test in Austin, Texas, over the summer and expanded its service area a few weeks later — however, a safety driver still remains in each Robotaxi.
It has been testing a ride-hailing service in the San Francisco Bay Area, but the cars are driven by a human. The tests and comments coming from Tesla have alarmed local officials in California.
Reports suggest Tesla may introduce some form of Robotaxi testing in Nevada and Arizona as well, but nothing official has been announced.
“We continue to strongly believe the most important chapter in Tesla’s growth story is now beginning with the AI era now here. It starts with autonomous then robotics as we believe the autonomous valuation is worth $1 trillion alone to the Tesla story over the next few years that will start to get unlocked over the coming months,” Wedbush analyst Dan Ives wrote in a note to investors.
Ives, one of the biggest Tesla bulls on Wall Street, has a $600 price target on the stock.
Barclays analyst Dan Levy notes Robotaxis are the “most central aspect” of the bull case for Tesla, and news about Robotaxi and autonomous progress has been quiet.
Levy points out that investors are primarily interested in when the safety driver will be pulled from the Austin test.
“A major focus on the conference call will likely be the Robotaxi rollout across the US and volume production trajectory for Cybercabs/Optimus [robots] in 2026,” Tesla investor Nancy Tengler of Laffer Tengler Investments said in a statement to Yahoo Finance.
A Tesla shareholder since 2017, Tengler noted another “key focus” for Tesla investors will be the company’s shareholder meeting on Nov. 6, where she expects shareholders to approve Musk’s mind-boggling $1 trillion pay package.
Musk’s current pay package is embroiled in a lawsuit in Delaware, where shareholders alleged they didn’t have enough information to properly vet the compensation awarded by the board and a trial judge agreed. The Delaware Supreme Court is currently weighing the merits of Tesla’s appeal.
Musk’s newer package faces criticism as well. Independent proxy advisers Glass Lewis and ISS have both recommended that shareholders reject Musk’s latest proposed pay package.
Pras Subramanian is Lead Auto Reporter for Yahoo Finance. You can follow him on X and on Instagram.
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