Tesla profits plunge nearly 40 percent in third quarter, and it gets worse

When compared to the overall terrible year Tesla has experienced, the company actually had a decent third quarter.

However, a decent quarter in 2025 for Tesla still means that the company's profits fell by 37 percent, despite the company's revenue growing by 12 percent in that time.

Elon Musk's EV company reported $28.1 billion in revenue for the third quarter that ended in September. However, the company's operating costs skyrocketed by 50 percent. So, even with a rise in revenue thanks to a spike in sales, Tesla reported just $1.4 billion in profit in Q3 2025. 

That's out of $25.2 billion in revenue and down from last year's $2.2 billion in income.

Tesla's woes don't stop there. Even the major positive for the company — a sales boost in the third quarter, when the company sold a record number of EVs — has a major asterisk.

Tesla's problems are just beginning

For years, Tesla has been buoyed by tax credits and regulatory carbon credits, but it can't rely on either going forward.

In fact, the Q3 sales bump Tesla reported appears to be the result of consumers rushing to purchase an EV before the $7,500 federal EV tax credit program expired on September 30. Instead of a turnaround, this was a one-time event driven by last-minute buyers who were already planning to purchase a vehicle and wanted to take the last opportunity to save money with the EV tax credit.

Tesla delivered 497,099 vehicles in Q3. However, it looks unlikely that the company will be able to replicate those sales numbers without the tax credit that gave buyers a push to make their purchase.

But there's more to Tesla's problems, too. Of the company's third-quarter profits, $417 million came from Tesla selling regulatory carbon credits to other automakers. These regulatory credits have long been a significant chunk of the EV company's revenue. However, as part of President Donald Trump's budget bill, the U.S. government is set to end the carbon credit program, thus cutting Tesla off from a major source of revenue.

Musk himself is a major contributor to Tesla's problems. The company's revenue troubles began shortly after Musk made himself and the Tesla brand a pariah to liberal-leaning customers as a result of his connections to President Trump and Musk's involvement in DOGE.

Despite all of this though, Musk still made the case for a $1 trillion compensation package during the quarterly earnings call so that he could control Tesla's "robot army."