Tesla stock lower after Q3 earnings miss; Musk says Robotaxi expansion coming by end of the year
Tesla (TSLA) reported mixed third quarter results on Wednesday after the bell as the company forges ahead in a post-EV tax credit environment, with investors eyeing Robotaxi progress.
For the quarter, Tesla reported Q3 revenue of $28.01 billion vs $26.27 billion expected, per Bloomberg, a 12% jump from the $25.18 billion reported a year ago. Tesla posted adjusted earnings per share (EPS) of $0.50 vs $0.54 estimated, translating to EBITDA of $4.23 billion vs $3.78 billion expected. Operating profit fell 40% to $1.624 billion from a year ago.
Tesla also said lower regulatory emissions credit revenue weighed on profitability.
Tesla stock was around 3% in after-hours trading.
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After noting it launched a “ride-hailing service in the Bay Area using Robotaxi technology,” CEO Elon Musk gave investors a few updates on Robotaxis.
“We are expecting to have no safety drivers in large parts of Austin by the end of this year … We are being very cautious about the deployment,” Musk said on the earnings conference call following the report. Musk added that Tesla aims to launch Robotaxi tests in 8 to 10 metro areas by the end of the year, including Nevada, Florida, and Arizona.
Tesla’s Q3 earnings report comes with the S&P 500 (^GSPC) and Nasdaq (^IXIC) within striking distance of new highs. The broader market has shaken off President 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 are still in place, hurting domestic automakers.
Tesla noted on the conference call that its tariff hit in Q3 rose to $400 million; the company posted a $300 million tariff hit in Q2.
“It is difficult to measure the impacts of shifting global trade and fiscal policies on the automotive and energy supply chains, our cost structure and demand for durable goods and related services,” the company said in its earnings release.
Earlier this month, 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 the 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.
Tesla 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 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.
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.
Tesla has been testing a ride-hailing service in the San Francisco Bay Area, but the cars are driven by people. 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.
Read more: How to avoid the sticker shock on Tesla car insurance
Ives, one of the biggest Tesla bulls on Wall Street, has a $600 price target on the stock.
“A major focus … 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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