Never before has Tesla sold so many cars, yet investors are disappointed. Why?

October 24, 2025

Record sales, but lower profits

By now the whole world knows that Elon Musk is a peculiar entrepreneur. His brief flirtation with Donald Trump certainly did Tesla no good. Sales plummeted, especially in Europe, and the brand’s image took a big hit. Yet many buyers now seem not to care: Tesla is selling like never before. In the third quarter, nearly half a million cars rolled out of the factories – a new record.

But selling many cars does not automatically mean more profits. On the contrary: Tesla’s profits fell by as much as 37 percent compared to last year. Sales did increase, to over $28 billion, but margins are under severe pressure. Causes include higher import tariffs, rising development costs and the disappearance of U.S. tax breaks for electric cars.

According to chief financial officer Vaibhav Taneja, Donald Trump’s U.S. tariffs alone cost the company $400 million in one quarter. Revenue from emission credits – which Tesla sells to manufacturers who fail to meet environmental regulations – also fell 44 percent.

Temporary peak

In addition to lower earnings, investors are also worried about the future. Indeed, Tesla’s recent sales surge appears to be mostly a temporary effect. In the United States a subsidy of up to $7,500 for buyers of electric cars applied until the end of September. Many consumers quickly seized that opportunity, causing sales to skyrocket briefly.

But that subsidy has since been removed by the Trump administration. As a result, new buyers no longer receive a tax break, which could significantly reduce demand for electric cars. Without that financial push, a Tesla suddenly becomes a lot less attractively priced. That is probably exactly why Tesla recently launched cheaper versions of the Model Y and Model 3 – an attempt to get ahead of an expected decline in sales in the coming quarters.

Musk would rather talk about robots than profits

CEO Elon Musk seems to care little for the criticism. Speaking to investors, he spoke at length about Tesla’s future in artificial intelligence and robotics. According to Musk, the human-like robot Optimus will one day be the most important product Tesla makes. “We are building a future without poverty,” he said, although not everyone in the meeting seemed convinced.

The timing is striking: Musk is trying to persuade shareholders to agree to a new compensation plan in November that could earn him a total of $1 trillion – converted to 900 billion euros, and yes, you read that right.