New York (AFP) – Tesla reported a hefty drop in profits Wednesday, citing a drag from tariffs and other expenses that more than offset a lift from increased auto sales. Elon Musk’s electric car company reported profits of $1.4 billion in the third quarter, down 37 percent from the year-ago period. Besides tariffs, which executives said were more than $400 million in the quarter, the company’s earnings press release cited higher restructuring expenses and lower revenues from regulatory credits as factors in the profits, which lagged behind analyst expectations. Revenues rose 12 percent to $28.1 billion, while operating expenses jumped 50 percent to $3.4 billion, due in part to heftier outlays on research and development.
While Tesla faces “near-term uncertainty from shifting trade, tariff and fiscal policy,” the company is making investments that will lead to “incredible value for Tesla and the world across transport, energy and robotics,” the company said. US sales of electric vehicles manufactured by Tesla and other companies got a boost in the third quarter with the September 30 expiration of a federal tax credit, which prompted buyers to move up purchases of the vehicles. Tesla followed up those better-than-expected sales with the release of two “standard” vehicles in early October at somewhat lower price points.
Analysts gave the offerings mixed reviews, with some expressing skepticism that the vehicles would lead to a sustained resurgence in consumer demand. Some leading auto analysts have said they do not expect a significant uptick in Tesla sales until it launches a new vehicle. “We believe that for Tesla to return to growth on a sustainable basis requires an expansion of the company’s lineup,” said an October 3 note from JPMorgan that targeted the first quarter of 2026 as the date of an expected new vehicle launch. Wedbush analyst Dan Ives also pointed to early next year as a timeframe for new models, while highlighting Musk’s progress on autonomous, robotic and artificial intelligence as a key focus for investors.
“We continue to strongly believe the most important chapter in Tesla’s growth story is now beginning with the AI era now here,” said Ives, who projects autonomous technologies will lift Tesla’s market valuation by $1 trillion. Also ahead is a November 6 annual meeting at which shareholders will consider a compensation package for Musk that could top $1 trillion and lift his overall stake in the company to more than 25 percent of total shares if the controversial CEO meets key performance and market capitalization targets. Musk said he wants the bigger stake to have more influence as the company chases ambitious ventures in robotics and beyond.
“It’s not like I’m gonna go spend the money,” Musk said on a conference call. “That’s what it comes down to. I don’t feel comfortable building that robot army if I don’t have at least a strong influence.”
Leaving Washington – Shares of Tesla have recovered in recent weeks after deep declines in the spring when Musk faced heavy criticism over his work in President Donald Trump’s administration and loud blowback over his embrace of other far-right politicians. Sales of Tesla vehicles have languished especially hard in Europe and the United States amid boycotts and instances of auto vandalism. While US sales were boosted in the last quarter by the end of the $7,500 tax credit, a drop-off in the fourth quarter is expected.
But the stock has soared since Musk left the White House in May. Shares fell 3.2 percent Wednesday in after-hours trading following the release of the results. Although Musk has not spoken out as frequently on political topics since that time, he sparred with Trump’s acting NASA Administrator earlier this week after the space agency chief invited other companies to compete with the billionaire’s SpaceX for the mission to return humans to the moon.
“Sean Dummy is trying to kill NASA!” Musk said in a post on X, referring to Sean Duffy, who also serves as US transportation secretary. But Duffy told Fox News that while he “loves” SpaceX, the company is “behind” schedule. “They pushed their timelines out and we’re in a race against China,” Duffy said on Fox News.
© 2024 AFP
