Tesla's Record Revenue: Triumphs and Trials in the EV Frontier

Tesla reported a record revenue for Q3, surpassing Wall Street estimates, driven by high EV sales before a key tax credit expired. However, profit fell short due to tariffs, research costs, and reduced regulatory credits. New lower-cost EVs aim to counter diminishing demand despite potentially affecting profit margins.

Tesla reported record-breaking revenue for the third quarter, exceeding Wall Street forecasts as electric vehicle sales surged before the expiration of a significant tax credit last month. Despite the revenue milestone, the company's profits disappointed analysts, mainly due to tariffs, elevated research costs, and a decrease in income from regulatory credits, which are likely to continue declining due to recent legislative changes.

The Austin-based automaker's valuation, driven by hopes on CEO Elon Musk's robotics and AI shift, remains heavily reliant on vehicle sales for financial viability. Market reactions were swift, with Tesla shares falling 4% in after-hours trading. The removal of tax credits, once a catalyst for electric vehicle demand, casts uncertainty over future sales volumes.

To counter anticipated demand downturns, Tesla introduced less pricey 'Standard' versions of its Model Y and Model 3, stripping features to cut costs. Nevertheless, analysts caution that these moves might pressure profit margins, as price reductions may not fully offset the increased expenses associated with the company's ambitious innovation pursuits, including the forthcoming Cybercab robotaxi and energy business expansions.

(With inputs from agencies.)