Tesla Q3 Profits Plunge 37% Despite EV Tax Credit Sales Surge, Musk Pay Package Vote Looms

Profit Decline Amid Sales Surge

Tesla experienced a 37% year-over-year profit decline in its most recent quarter, according to the company’s earnings report, despite achieving record vehicle deliveries. The automaker reportedly posted net income of $1.4 billion, down from $2.2 billion in the same period last year, while earnings per share of 50 cents fell short of the 54 cents analysts had projected.

Profit Decline Amid Sales Surge
Tax Credit Expiration Drives Delivery Spike
Musk’s Compensation Battle Intensifies
Regulatory and Competitive Challenges
Future Revenue Projections Questioned

Sources indicate the profit drop occurred even as Tesla exceeded revenue expectations of $26.457 billion. The company‘s operating income of $1.62 billion also reportedly missed analyst projections of $1.65 billion, contributing to after-hours stock declines following the earnings announcement.

Tax Credit Expiration Drives Delivery Spike

Analysts suggest the surge in vehicle deliveries resulted from consumers rushing to secure electric vehicle tax credits before their expiration at the end of last month. The report states that the loss of EV credits under what sources describe as Donald Trump’s “One Big Beautiful Bill Act” influenced both consumer behavior and Tesla’s sales forecasts.

This tax credit expiration reportedly contributed to the public breakup between Musk and the president, adding another layer of complexity to Tesla’s political and regulatory challenges. The company‘s earnings release specifically mentioned “shifting trade, tariff and fiscal policy” as ongoing concerns.

Musk’s Compensation Battle Intensifies

The earnings report comes during a critical period for CEO Elon Musk, who is seeking shareholder approval for an unprecedented $1 trillion compensation package in a November 6 vote. According to reports, the package depends on Tesla achieving several ambitious milestones, including reaching an $8.5 trillion market capitalization within the next decade.

Two influential proxy advisory firms, Glass Lewis and Institutional Shareholder Services, have reportedly recommended against approving the compensation plan. Tesla responded to ISS’s negative recommendation by calling it an “unfounded and nonsensical recommendation” in a social media post, while Musk implied he might leave the company if the package isn’t approved.

Regulatory and Competitive Challenges

Tesla faces increased regulatory scrutiny and competitive pressure across its operations. According to reports, the U.S. transportation safety regulator is investigating Tesla’s autonomous taxi service deployment in Austin, Texas. Meanwhile, the company’s newly launched Model Y sedan received criticism for starting prices between $36,990 and $39,990 – significantly higher than competing Chinese electric vehicles.

Analysts suggest Musk’s political activities and recent public disputes with government officials have created additional headwinds. The CEO reportedly insulted Transportation Secretary Sean Duffy in social media posts, calling him “Sean Dummy” and reposting calls for his removal. This occurred after Duffy announced he would reopen bidding for NASA’s Artemis moon mission contracts because Musk’s SpaceX had fallen behind schedule.

Future Revenue Projections Questioned

Despite current challenges, Musk continues to promote ambitious future technologies as key revenue drivers. According to his recent statements, Tesla’s Optimus Robots – humanoid machines not yet in mass production – could eventually account for 80% of company revenue. He has made similar projections about robotaxis populating cities worldwide, though analysts note these timelines have been repeatedly pushed back.

The company’s Cybertruck, released in 2024, has reportedly failed to make a meaningful contribution to overall sales. As Tesla navigates this transitional period, investors are weighing the company’s current financial performance against Musk’s visionary promises ahead of the crucial compensation vote next month.