Newsletter
Tesla’s Q3 earnings hit a speed bump, with profits falling 29% year-on-year to $1.8 billion, missing estimates. Rising AI expenses and new US tariffs cost into its margins, weighing down overall performance.
By the numbers: revenue rose 12% YoY to $28.1 billion, beating forecasts, but operating margin nearly halved to 5.8% from 10.8% last year.
The company sold a record 497,099 cars, but that wasn’t enough to make up for the loss of money it used to earn from selling emissions credits.
The why: Tesla’s pivot to AI, robotics, and autonomous driving is proving costly. The company spent heavily on Nvidia H100 GPUs and AI talent as it preps for robotaxis and humanoid robots.
Meanwhile, US tariffs added over $400 million in costs, splitting evenly between its car and battery units. The result? Strong sales, but slimmer profits.
At the same time, AI-related costs soared, pushing overall expenses up 50% to $3.4 billion.
Company outlook: Tesla expects capital spending to rise substantially by 2026, beyond this year’s $9 billion, as the company gears up for its “next phase of growth.” Despite short-term margin pain, Musk is betting big that AI and automation will drive Tesla’s next trillion-dollar leap.
Big theme: with global supply chains disrupted by tariffs and the US-China trade war, India’s growing EV and battery ecosystem could quietly benefit. Tesla has long scouted Indian states for potential EV manufacturing or sourcing partnerships, and the push for localised supply chains could revive those talks.
