Tesla Stock Falls as Q3 Profit Misses Estimates and EV Demand Concerns Rise
Tesla shares fell more than 3% in early U.S. trading on Thursday after the electric vehicle maker reported third-quarter earnings that came in below Wall Street expectations. The results come as the company prepares for a potential slowdown in U.S. demand following the expiration of a federal EV tax credit.
For the quarter, Tesla reported adjusted earnings of $0.50 per share on $28.1 billion in revenue, missing forecasts of $0.54 per share and $26.22 billion, respectively.
Sales Boosted by Expiring EV Tax Credit
Total vehicle deliveries rose 7% year-over-year to 497,098 units, driven largely by a last-minute surge in buyers seeking to qualify for the $7,500 electric vehicle tax credit, which expired at the end of last month. However, the boost in sales was offset by higher operating expenses, pressuring profits.
Gross margins, excluding credits, stood at 17%, unchanged from the same period last year — a key metric closely watched by investors as Tesla faces intensifying competition in the EV market.
AI and Robotaxi Projects Seen as Next Growth Drivers
Amid growing competition, analysts say Tesla’s future growth may rely less on car sales and more on its AI, autonomous driving, and robotics initiatives. Researchers at Tesla estimate the company’s AI and self-driving business could be worth $1 trillion in the long run.
Tesla reaffirmed progress in these areas, noting that its “Cybercab” robotaxi, a two-passenger self-driving vehicle, remains on track for mass production in 2026. Additionally, the company announced that its Optimus humanoid robot has been formally positioned for near-term production.
Analysts at Stifel said Tesla remains “very well positioned,” emphasizing that robotaxi and full self-driving technologies will be key value drivers for the company moving forward.
However, analysts at Vital Knowledge pointed out that investor debates now center on Tesla’s true identity — whether it should be valued as a traditional automaker or as an AI and robotics company.
“If it’s just an auto company, then the stock is wildly overvalued,” they wrote. “But if it’s an AI and autonomous driving company, as Elon Musk claims, the valuation may be justified.”
