In a blow for Elon Musk, Tesla's profit dips in third quarter despite rise in sales; here’s why and what is Musk’s robotaxi expansion plan

In a blow to Tesla, the U.S. automaker reported a sharp profit drop on Wednesday (October 22, 2025), despite higher vehicle sales in the past three months. Tesla shares fell 3% to $425.90 in after-hours trading. Following the revelation of recent numbers, Tesla marked the fourth quarter in a row in which the company saw a drop in profit.

The automaker's earnings in the third quarter came to $1.4 billion, or 39 cents a share, from $2.2 billion, or 62 cents a share, a year earlier. The revenue of the automaker rose to $28.1 billion from $25.2 billion in the June through September period, beating Wall Street’s forecast.

Excluding certain charges, earnings were 50 cents per share, down from 72 cents per share a year ago and below the 56 cents forecast by Wall Street analysts.

What boosted Tesla’s third-quarter sales

Tesla's third-quarter sales were boosted by customers rushing to take advantage of a $7,500 federal tax credit for EV purchases before it expired on Oct. 1, possibly stealing sales from the current quarter.

According to AP, financial analysts had been upping their estimates of revenue since Musk announced earlier this month that sales of electric vehicles, one part of the multipronged business, rose 7% in the quarter after plunging for most of the year.

Tesla was also helped by surging sales from its separate battery storage and electric charging businesses, but the EVs still make up much of the overall revenue figures. Musk was predicting 20% to 30% sales growth for 2025 at this time last year, but it hasn't turned out that way.

How discounts and incentives affected Tesla

The automaker’s gross margins hit 18%, the highest for this year, but still down from the third quarter a year ago. The figures, which show how much money Tesla makes after paying staff, raw materials, and other basic expenses, are also down from 25% four years ago as the company offers discounts and other incentives to fight back against rival EV makers that have been stealing market share.

Elon Musk’s Robotaxi service plan

The stock slipped as Musk sought to shift investor attention away from selling cars to other businesses: its driverless robotaxi service, its AI product, and its Optimus robots for the home and factories.

“It’ll seem so real that you’ll need to poke it,” he said of the Optimus, predicting it will likely become “the biggest product of all time,” as quoted by news agency AP.

Musk, who co-founded Tesla, also said he was confident enough in the robotaxi to remove “safety monitors” from the driver's seat by the end of the year in its first market, Austin, Texas. He added that the service, which is also available in San Francisco, will roll out to as many as 10 other metro areas also by the end of the year.