Tesla's Big Sales Win Turns Sour on Profits

The electric car leader disclosed July–September results, underscoring a discrepancy between what left the showroom and what reached the bottom line. It's the kind of twist that keeps investors up at night—and it makes one wonder if even record-breaking wins come with hidden catches these days.

Tesla shipped a whopping 500,000 vehicles worldwide, smashing past last year's mark by about 10%. That rush came mostly from folks in the U.S. scrambling to snag a $7,500 federal tax break on EVs before it vanished at the end of September, thanks to a new spending bill signed by President Trump.

Elon Musk, speaking from the Austin headquarters, labeled it a "temporary boost" and admitted the end of that benefit would make the road ahead tougher. Revenue hit $26.5 billion, topping what experts forecasted, yet adjusted earnings per share landed at 50 cents—short of the 54 cents Wall Street hoped for.

Operating expenses surged by 50% to back ambitious AI projects and next-gen manufacturing facilities, reducing profit margins across the board. Then there's the drop in so-called regulatory credits, those payments from rival carmakers who buy Tesla's clean-air extras to meet rules. Those dipped 44% to $417 million, squeezed by policy shifts under the new administration. Gross margins slipped to 18% from nearly 20% a year back, partly because Tesla slashed prices on hits like the Model Y to keep buyers coming.

Over in Europe, sales actually dipped, hit by tougher competition from outfits like Volkswagen.

With cheaper Model 3 and Y versions rolling out this month, Musk promises the company will adapt and zoom past 2026 hurdles. For now, it's a reminder that in the EV race, speed doesn't always pay the bills.

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