Tesla’s record sales quarter has offered the company a reprieve after a terrible start to 2025. However, CEO Elon Musk is focused on building a robot army and making good on his years-long, unfulfilled promise of self-driving cars. He needs to accomplish these tasks to unlock the full value of the one trillion dollar compensation package that Tesla wants to award him.
The tension between Tesla’s current automotive-driven business and the AI-centric one that Musk is aiming for has never been more clear. Tesla delivered a record number of vehicles in the third quarter of 2025. This was thanks in large part to a rush of customers in the United States who took 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 percent lower than it was in the same quarter last year.
Tesla shipped 497,099 cars in the third quarter, which generated 21.2 billion dollars in automotive revenue. This was the company’s best revenue figure in more than a year. However, Tesla only pulled in a profit of 1.4 billion dollars, up just 200 million dollars from the second quarter of this year. The record quarter came after an abysmal start to the year for Tesla, which saw sales drop mightily in part because of Musk’s involvement with the Trump administration.
The company explained that a big increase in operating expenses was one of the culprits. Expenses were 50 percent higher compared to the third quarter last year. That operating expense bump was thanks to spending on AI and other research and development projects, as well as restructuring charges of nearly 240 million dollars. Tesla did not explain what those restructuring charges were for, but it is possibly 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 this past quarter. This means Musk spent around 300 million dollars to help elect a president who has hurt the company’s business. Tesla’s chief financial officer, Vaibhav Taneja, said on a conference call the tariff hit was about 400 million dollars.
The company’s leadership emphasized a strategic shift. They stated they are at a critical inflection point for Tesla as they bring AI into the real world. Musk said Tesla is at the beginning of scaling, quite massively, Full Self-Driving and Robotaxi, and fundamentally changing the nature of transport.
All of this will put even more pressure on the company’s final quarter of the year. Tesla already needs another record quarter if it wants to simply match the number of cars it shipped in 2024 or 2023. The company could get some help from new slightly cheaper stripped-down versions of the Model 3 and Model Y electric vehicles. But even in that best-case scenario, Tesla is way off the path of 50 percent year-over-year growth that it once promised to investors and shareholders.
Musk has spent the last few years trying to get everyone to look beyond the company’s core business of making and selling cars. He has bet the future of Tesla on being able to create a vast network of self-driving vehicles that he thinks can challenge Uber. He also thinks the humanoid robot, Optimus, will become the best-selling product ever.
Tesla offered little new information on those programs in its shareholder letter. Musk said on the conference call that Tesla may start 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 the company has reportedly run into problems in early production with Optimus. Musk acknowledged that bringing Optimus to market is an incredibly difficult task.
But Musk continued Tesla’s unspecific claims about how much Optimus will change the world. He stated that you can actually create a world where there is no poverty, where everyone has access to the finest medical care, and that Optimus will be an incredible surgeon.
The increased focus on AI, robotics, and self-driving cars will also cost Tesla more next year. The chief financial officer said capital expenditures will increase substantially in 2026 thanks to those 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 amid the backdrop of the company’s proposal to hand one trillion dollars worth of shares 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 advisor groups like ISS and Glass Lewis are recommending against the pay package, it is most likely going to pass given the overwhelming support from shareholders on previous efforts.
That has not stopped Musk from threatening to walk away from Tesla if the package is not approved. On the conference call, he reiterated his claim that he cares more about the voting control the compensation package would afford him than the money. He stated he does not feel comfortable building a robot army and then being ousted because of recommendations from ISS and Glass Lewis, whom he called corporate terrorists.