Tesla’s record sales quarter barely boosted profit

Tesla delivered a record number of vehicles in the third quarter of 2025, thanks in large part to a rush of customers in the United States who took advantage of the expiring federal EV tax credit. But that record quarter did not lead to greater earnings. In fact, Tesla’s third-quarter profit was still 37% lower than it was in the same quarter last year.

Tesla shipped 497,099 cars in the third quarter, which generated $21.2 billion in automotive revenue — the company’s best revenue figure in more than a year. But Tesla only pulled in a profit of $1.4 billion, up just $200 million from the second quarter of this year, according to a shareholder letter released Wednesday. The record quarter came after an abysmal start to the year for Tesla, which saw sales drop mightily in part because of CEO Elon Musk’s involvement with the Trump administration.

The company explained in the letter that a big increase in operating expenses — 50% higher compared to the third quarter last year — was one of the culprits. That OpEx bump was thanks to spending on AI and other R&D projects, as well as “restructuring” charges of nearly $240 million. Tesla didn’t explain what those restructuring charges were for, but it’s possibly related to the recent decision to shut down the company’s six-year Dojo supercomputer project.

Tesla cited tariffs as another drag on profits this past quarter, meaning the man Musk spent around $300 million to help elect has hurt the company’s business.

This will put even more pressure on the company’s final quarter of the year.

Tesla already needs another record quarter (and then some) if it wants to simply match the number of cars it shipped in 2024 or 2023. The company could get some help from the new slightly-cheaper stripped-down versions of the Model 3 and Model Y EVs. But even in that best-case scenario, Tesla is way off the path of 50% year-over-year growth that it once promised to investors and shareholders.

But Musk has spent the last few years trying to get shareholders, investors, employees, and everyone else to look beyond the company’s core business of making and selling cars. He’s bet the future of Tesla on being able to create a vast network of self-driving vehicles that he thinks can challenge Uber. And he thinks the humanoid robot, Optimus, will become the best-selling product ever. Tesla offered little new info on those programs in Wednesday’s letter.

All of this is happening amid the backdrop of Tesla’s proposal to hand $1 trillion worth of shares to Musk. That plan is up for a vote at the company’s annual shareholder meeting in a few weeks. The company — and Musk — are campaigning hard. While advisor groups like ISS and Glass Lewis are recommending against the pay package, it’s most likely going to pass given the overwhelming support from shareholders on previous efforts.

That hasn’t stopped Musk from threatening to walk away from Tesla if the package isn’t approved.