Tesla third-quarter profit falls short despite record sales, hit by higher costs and fading tax credits

TESLA reported record third-quarter revenue that beat Wall Street estimates on Wednesday, driven by the highest quarterly sales of its electricvehicles (EV) as US buyers rushed to lock in akey tax credit ahead of its expiry last month.

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However, Tesla’s profit failed to live up to analysts’ expectations, in part due to tariff and research costs, as well as a drop in income from regulatory credits that are expected to continue to fade away with recent legislation passed by the Trump administration.

Tesla’s $1.45-trillion valuation largely reflects investor bets on Chief Executive Officer Elon Musk’s pivot to robotics and artificial intelligence, but vehicle sales remain key to the financial stability of the company while those products are being developed. Shares of the Austin, Texas-based company were down 4% in extended trading,

Demand for Tesla’s vehicles and those of its rivals is also expected to drop through the rest of the year without the tax credits that have been a key driver of EV sales.