Tesla's profit tumbles despite record sales, amid higher costs and fading tax credits

Tesla’s profit plunged more than expected, as sharply rising costs undercut the highest quarterly sales of its electric vehicles (EVs) as US buyers rushed to lock in a key tax credit ahead of its expiry.

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Analysts surveyed by Bloomberg expect EV manufacturer Tesla to report a second year in a row of declining vehicle deliveries.

(PHOTO: BLOOMBERG)

Profit fell 37 per cent to US$1.4 billion (S$1.8 billion) from a year earlier, below analysts' forecast, even as revenue rose 12 per cent to US$28.1 billion.

The results show that the EV manufacturer is not immune to the rising costs that have buffeted the nation’s auto industry all year as President Donald Trump radically overhauls policy.

Tesla’s operating expenses soared 50 per cent to US$3.4 billion in the quarter, driven by artificial intelligence (AI) and other research and development projects.

In an earnings conference call on Oct 22, chief financial officer Vaibhav Taneja said capital expenditures would rise substantially in 2026.

Tesla expects about US$400 million of impact from US tariffs.