Tesla’s Profits Plummet Despite Surging Vehicle Sales
Tesla’s recent financial quarter has been a study in contrasts, as the electric vehicle giant recorded record vehicle sales while simultaneously experiencing a steep decline in profits. The company’s sales were buoyed by a consumer rush to purchase electric vehicles before the expiration of a U.S. tax credit, yet this boost was not enough to meet Wall Street’s earnings expectations.
In its third-quarter earnings report, Tesla announced earnings of $0.50 per share, falling short of analysts’ predictions of $0.54. Despite surpassing revenue expectations at $26.457 billion, the company’s operating income was slightly below expectations at $1.62 billion. Net income fell significantly to $1.4 billion from $2.2 billion, marking a 37% drop in profits.
Analysts attribute the surge in Tesla’s vehicle deliveries to consumers eager to secure electric vehicle tax credits that expired at the end of last month. These credits were lost as a result of the One Big Beautiful Bill Act, adding to the tensions between Elon Musk and the U.S. government.
Amid these developments, Tesla emphasized its commitment to advancing AI software and expanding autonomous driving technology. “No one can do what we can do with real-world AI,” Musk stated during an investor call, highlighting potential in Tesla’s Optimus robots and claiming they could become “the biggest product of all time.”
Musk also made bold declarations regarding his vision for a future without poverty, driven by Optimus and self-driving technology. He referenced his proposed $1 trillion pay package, which he believes will provide protection against being “ousted” if Tesla achieves a “robot army.”
The timing of the earnings report is critical, as Musk seeks shareholder approval for his ambitious pay package. The plan hinges on Tesla achieving several milestones, including reaching an $8.5 trillion market cap over the next decade. However, two advisory firms, Glass Lewis and Institutional Shareholder Services (ISS), have recommended voting against the package.
During a call with investors, Musk predicted that Tesla’s robotaxi service, which currently requires a safety driver, would soon operate driverless in Austin. Despite these ambitious plans, the U.S.’s main transportation safety regulator is investigating reports of traffic violations and crashes involving Tesla’s Full Self Driving technology.
In a separate controversy, Musk recently criticized Sean Duffy, the U.S. transportation secretary, referring to him as “Sean Dummy” in a series of social media posts. This comes as Duffy, also acting head of NASA, announced plans to reopen bidding for the Artemis moon mission contracts due to SpaceX’s delays.
Shareholders are expected to vote on Musk’s $1 trillion pay package at the annual meeting on November 6. Tesla and Musk have both criticized the advisory firms’ recommendations against the package, with Musk hinting at potential departure if the compensation plan is not approved.
This year has been turbulent for Tesla, marked by increased competition, loss of key tax credits, and Musk’s controversial leadership. Despite falling profits and revenue last quarter, Tesla’s stock has rallied in recent months, driven by Musk’s focus on autonomous taxis and robotics.
In a bid to revive sales, Tesla recently introduced the Model Y, a more affordable sedan, although it faced criticism for its pricing compared to Chinese competitors. The launch of the Cybertruck last year has also not significantly boosted sales.
Original Story at www.theguardian.com