Tesla’s record sales quarter has offered the company a reprieve after a terrible start to 2025. But CEO Elon Musk is focused on building a “robot army” and delivering on his years-long, unfulfilled promise of self-driving cars — tasks he must complete if he is to unlock the full value of the $1 trillion compensation package Tesla will award him.
The tension between Tesla’s current car-driven business and the AI-centric one Musk aims for has never been clearer.
Tesla delivered a record number of vehicles in the third quarter of 2025, thanks in large part to an influx of US customers taking advantage of the expiring federal EV tax credit. But that record quarter did not lead to greater earnings. In fact, Tesla’s third-quarter profit was still 37% lower than it was in the same quarter last year.
Tesla shipped 497,099 cars in the third quarter, generating $21.2 billion in auto revenue — the company’s best revenue figure in more than a year. But Tesla posted a profit of just $1.4 billion, up just $200 million from the second quarter of this year, according to a shareholder letter released Wednesday. The record quarter came after an abysmal start to the year for Tesla, with sales falling sharply in part because of Musk’s involvement in the Trump administration.
The company explained in the letter that a large increase in operating costs – 50% higher compared to the third quarter of last year – was one of the culprits. That operating expense increase was thanks to spending on artificial intelligence and other R&D projects, as well as “restructuring” costs of nearly $240 million. Tesla did not explain what those restructuring charges were for, but it may be related to the recent decision to shut down the company’s six-year-old Dojo supercomputer project.
Tesla cited tariffs as another drag on profits in the latest quarter, meaning Musk spent about $300 million to help elect a president that has hurt the company’s business. Tesla’s chief financial officer, Vaibhav Taneja, said on a conference call Wednesday that the rate was about $400 million.
“We are at a critical juncture for Tesla and our strategy going forward as we bring AI into the real world,” Musk said on the call. Tesla is at “the beginning of scaling, quite massively, Full Self-Driving and Robotaxi, and fundamentally changing the nature of transportation,” he said.
Techcrunch event
San Francisco
|
27.-29. October 2025
All of this will put even more pressure on the company’s final quarter of the year.
Tesla already needs another record quarter (and then some) if it’s just going to match the number of cars it shipped in 2024 or 2023. The company could get some help from the new slightly cheaper stripped-down versions of the Model 3 and Model Y EVs. But even in the best-case scenario, Tesla is far off the path to the 50% year-over-year growth it once promised investors and shareholders.
But Musk has spent the last few years getting shareholders, investors, employees and everyone else to look beyond the company’s core business of making and selling cars. He bets Tesla’s future on being able to create a large network of self-driving vehicles that he believes can challenge Uber. And he believes that the humanoid robot, Optimus, will be the best-selling product ever.
Tesla offered little new information about those programs in Wednesday’s letter. Musk said on the conference call that Tesla may begin building the third version of Optimus in the first quarter of 2026. He had once promised to build thousands of the robots by the end of this year, but as The Information has reported, Tesla has run into problems in early production with Optimus.
“Bringing Optimus to market is an incredibly difficult task, to be clear. It’s not a walk in the park,” Musk said.
But Musk continued Tesla’s vague, nonspecific claims about how much Optimus will change the world. “You can actually create a world where there is no poverty, where everyone has access to the best medical care,” he said. “Optimus will be an incredible surgeon.”
The increased focus on artificial intelligence, robotics and self-driving cars (including the start of production of the two-seat “Cybercab”) will also cost Tesla more next year. Taneja said capital spending will increase “significantly” in 2026 thanks to these projects. He also said Tesla has had to increase employee-related spending to stay competitive in the ongoing AI talent war.
Tesla’s third quarter results come on the back of the company’s proposal to issue $1 trillion worth of stock to Musk. That plan is up for a vote at Tesla’s annual shareholder meeting in a few weeks. The company — and Musk — are campaigning hard. While advisory groups such as ISS and Glass Lewis advise against the pay package, it is most likely to pass given the overwhelming support from shareholders for previous efforts.
That hasn’t stopped Musk from threatening to walk away from Tesla if the package isn’t approved.
On Wednesday’s call, he repeated his claim that he cares more about the vote control the compensation package would give him than the money.
“I just don’t feel comfortable building a robot army here and then being driven out because of some insane recommendation from the ISS and Glass Lewis, who have no idea. I mean, those guys are corporate terrorists,” Musk said.
This story has been updated with new information from Tesla’s third quarter conference call.