Tesla Q3 Earnings Report Reveals 37% Profit Decline Amid Musk’s AI Robot Focus

Profit Decline and Market Reaction

Tesla shares reportedly declined approximately 5% following the company’s third-quarter earnings release, which revealed a significant drop in profitability. According to the analysis, Tesla’s profits sank to $1.4 billion, representing a 37% decrease compared to the same period last year. This profit slide occurred despite the automaker achieving record vehicle deliveries exceeding 497,000 units during the quarter.

Profit Decline and Market Reaction
Shareholder Concerns Versus Executive Focus
Executive Compensation Controversy
Market Challenges and Strategic Shifts

Shareholder Concerns Versus Executive Focus

During the earnings call, shareholders reportedly sought details about several pressing business matters, including plans for new car models, updates on Tesla’s robotaxi development, and strategies for navigating the recent expiration of EV tax credits. However, sources indicate CEO Elon Musk devoted substantial attention to Tesla’s humanoid robot project, Optimus. Musk reportedly declared Tesla had become the “leader in real-world AI” and suggested the company was “on the cusp of something really tremendous with Optimus,” which he claimed has the “potential to be the biggest product of all time.”

The report states Musk elaborated on Optimus’s potential applications, suggesting the robot would be an “incredible surgeon,” with a new version demonstration planned for early 2026. Musk also disclosed that Tesla’s upcoming AI5 chip would be manufactured by both Samsung and TSMC, while clarifying that Nvidia chips would continue to be used for training AI models.

Executive Compensation Controversy

Near the conclusion of the earnings call, Musk reportedly referred to two shareholder advisory firms as “corporate terrorists” after they recommended votes against his compensation package. According to reports, Glass Lewis and ISS had previously opposed Musk’s $56 billion pay package, which was approved by shareholders but remains tied up in legal proceedings. This controversy emerged as Musk’s wealth reportedly reached approximately $487.5 billion, having briefly surpassed the $500 billion threshold earlier this month.

Market Challenges and Strategic Shifts

The record delivery figures coincided with the expiration of the $7,500 federal EV tax credit on October 1, which analysts suggest could impact future sales. According to the earnings call transcript, Musk had previously warned that Tesla might experience “a few rough quarters” following the credit’s expiration. Tesla’s finance chief Vaibhav Taneja reportedly expressed concerns about potential inventory challenges amid changing tariff policies.

In response to market conditions, Tesla recently introduced more affordable versions of its Model Y and Model 3 vehicles, marking the company’s first new product releases in years. This move comes after Musk had initially teased more budget-friendly options for Tesla’s expanding vehicle lineup.

The earnings report highlights the tension between Tesla’s core automotive business and Musk’s ambitious AI and robotics ventures, with shareholders seeking clarity on how these parallel developments will drive future growth amid current profitability challenges.

References

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