The US electric car manufacturer Tesla achieved an operating profit of $1.4 billion in the third quarter. That was slightly above analyst estimates of $1.3 billion. As expected, sales were just under $25 billion.
In an initial reaction, Tesla shares rose by around 5 percent, but then gave up some of their gains and were most recently 3 percent higher at $444.
At the same time, however, Tesla has to cope with a year of falling sales for the first time. Sales fell by 3 percent to around 95 billion US dollars. The reason is falling car sales: Tesla recorded the second annual decline in deliveries in a row in 2025. They fell by 8.5 percent to a good 1.6 million vehicles. Tesla reached its previous peak in 2023 with just over 1.8 million vehicles delivered.
Tesla boss Elon Musk (54) therefore tries to downplay the significance of weak car sales. As a result, Musk also upped the ante on his bet on artificial intelligence and autonomous driving on Wednesday. Robotaxis, AI technology and autonomous driving will be the profit drivers of the future, according to Musk. These promises had recently supported the share price.
Tesla is investing billions in xAI
Tesla announced on Wednesday evening that the company would invest around $2 billion in Elon Musk’s AI start-up xAI. This will strengthen the connections between the car manufacturer and xAI: the US car manufacturer should be perceived as a tech company that is increasingly benefiting from robotics and autonomous driving.
However, this bet is not only risky because of Tesla’s high current valuation and falling car sales: Elon Musk promises a lot with regard to robotics, However, his presentations recently resembled a magic and illusion show
. Since the beginning of the year, the share has still gained almost 10 percent and is only just below its record high.
Musk stops production of Models S and X
In order to free up capacity for robot production, Tesla will stop production of its larger electric car models S and X. The owners of the cars would continue to receive technical support over the life of the vehicles, Musk assured in a conference call with analysts on Thursday night (CET). Production of the two models is scheduled to end in the next quarter.
The Model S, introduced in 2012, was Tesla’s first vehicle developed entirely in-house. It established the company’s reputation as a manufacturer of Electric cars, which with good range, speed and attractive design can compete against the cars with combustion engines that dominated the market at the time. The Model The newer Model 3 and Model Y vehicles now make up the majority of Tesla’s business: last year, they accounted for almost 97 percent of deliveries.
In the future, Tesla’s humanoid robots called Optimus will be built on the current production lines for Model S and X. Musk recently announced that he wanted to put them on sale by the end of the year.
Tesla will also start production of self-driving robotaxi vehicles without steering wheel and pedals called Cybercab this year. Musk said that in the future they will build many more of these cars than any other model. Musk announced that they also want to turn the electric pickup Cybertruck into an autonomous car.
Annual sales fall, net profit collapses
At the same time, the decline in sales at Tesla is leaving its mark. The company’s sales, which in addition to the car business also include a stationary power storage division, shrank by 3 percent last year to $94.83 billion, according to information from Wednesday. In the core business alone, with cars, there was a decline of 10 percent. Net profit even fell by a good quarter to just under $5.8 billion.
Tesla is suffering from declining demand for its cars. In addition to the increasing competition among vehicles, the expiration of electric subsidies in the USA also plays a role.
Musk’s political commitment to the government of US President Donald Trump at the beginning of 2025 has also permanently frightened some customers. Tesla’s reputation has suffered greatly in Europe.