Tesla’s record quarterly sales 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 long-standing, unfulfilled promise of self-driving cars — tasks he must accomplish if he wants to unlock the full value of the prize package 1 trillion dollars.
The tension between Tesla’s current automotive-based business and the artificial intelligence Musk is targeting has never been clearer.
Tesla delivered a record number of vehicles in the third quarter of 2025, thanks in large part to a rush by customers in the United States to take advantage of the expiring federal EV tax credit. But that record quarter didn’t lead to bigger gains. In fact, Tesla’s third-quarter earnings were still 37% lower than they were 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 percentage in more than a year. But Tesla posted a profit of just $1.4 billion, just $200 million from the second quarter of this year, according to a shareholder letter was released Wednesday. The record quarter came after an abysmal start to the year for Tesla, which saw sales plummet in part because of Musk’s involvement with the Trump administration.
The company explained in the letter that a large increase in operating expenses – 50% higher compared to the third quarter of last year – was one of the culprits. This increase in operating expenses was driven by spending on artificial intelligence and other R&D projects, as well as “restructuring” charges of nearly $240 million. Tesla did not explain what these restructuring charges were for, but it is likely related to the recent decision to shut down the company’s six-year-old Dojo supercomputer project.
Tesla cited the tariffs as another drag on earnings last quarter, meaning Musk spent about $300 million to help elect a president who has hurt the company’s business. Tesla Chief Financial Officer Vaibhav Taneja said on a conference call Wednesday that the hit from the tariffs was about $400 million.
“We are at a critical inflection point for Tesla and our strategy moving 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.
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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 cover 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 EVs. But even in that best-case scenario, Tesla is a long way from the 50% year-over-year growth it once promised investors and shareholders.
But Musk has spent the last few years trying to convince shareholders, investors, employees and everyone else to look beyond the company’s core business of making and selling cars. He has staked Tesla’s future on being able to build a massive network of self-driving vehicles that he believes can challenge Uber. And he believes the humanoid robot, Optimus, will become the best-selling product of all time.
Tesla offered little new information about those programs in Wednesday’s letter. Musk said on the conference call that Tesla could start building the third version of Optimus in the first quarter of 2026. It once promised to build thousands of robots by the end of this year, but as The Information reported, Tesla has they are having problems in early production with Optimus.
“Bringing Optimus to market is an incredibly difficult task, to be clear. It’s no walk in the park,” Musk said.
But Musk continued Tesla’s nonchalant claims about how much Optimus will change the world. “You can really 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 autonomous cars (including the start of production of the two-seater “Cybercab”) will cost Tesla more next year. Taneja said capital spending will increase “substantially” in 2026 thanks to these projects. He also said Tesla needed to increase employee-related spending to stay competitive in the ongoing AI talent war.
Tesla’s third-quarter results come amid the company’s proposal to hand over $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 As ISS and Glass Lewis recommend against the pay package, it is highly likely to pass given the overwhelming support from shareholders in previous attempts.
That didn’t stop Musk from threatening to leave Tesla if the package has not been approved.
In Wednesday’s call, he reiterated his claim that he cares more about the vote control the compensation package will give him than the money.
“I’m just not comfortable building an army of robots here and then being kicked out because of some unscrupulous recommendation from ISS and Glass Lewis, who have no idea. I mean, these guys are corporate terrorists,” Musk said.
This story has been updated with new information from Tesla’s third quarter conference call.
