Tesla’s remarkable surge in vehicle sales during the third quarter has provided a much-needed boost after a challenging start to 2025. However, CEO Elon Musk remains fixated on his ambitions to build a “robot army” and fulfill his long-standing promise of self-driving cars—critical objectives he must meet to unlock the full potential of his proposed $1 trillion compensation package.
The disparity between Tesla’s current automotive-focused operations and Musk’s vision of an AI-centric future is becoming increasingly evident.
In the third quarter of 2025, Tesla achieved record vehicle deliveries, largely driven by a surge in U.S. customers rushing to take advantage of the soon-to-expire federal electric vehicle tax credit. Despite this record-breaking performance, the company reported a dip in profits, with its third-quarter earnings trailing 37% behind the same period last year.
Tesla delivered a total of 497,099 vehicles during this quarter, resulting in a notable $21.2 billion in automotive revenue—the highest figure the company has seen in over a year. However, profits only climbed to $1.4 billion, a modest increase of $200 million from the previous quarter, as detailed in a shareholder letter released on Wednesday. This record quarter comes after a dismal beginning to the year, which saw a significant drop in sales, in part due to Musk’s involvement with the Trump administration earlier in the year.
In the letter, Tesla attributed a substantial increase in operating expenses—up 50% compared to the same quarter last year—as a primary factor affecting profits. This rise in expenses was driven by spending on AI initiatives and various R&D projects, alongside restructuring costs amounting to nearly $240 million. While the company did not elaborate on these restructuring charges, they may relate to the recent decision to terminate its six-year-old Dojo supercomputer project.
Tesla also pointed to tariffs as another challenge impacting profits this quarter, indicating that Musk’s political expenditures—roughly $300 million to elect a president—have adversely affected the company’s bottom line. Tesla’s Chief Financial Officer, Vaibhav Taneja, disclosed during a conference call that the tariff impact was around $400 million.
Musk remarked on the call, “We are at a pivotal inflection point for Tesla and our strategic direction as we integrate AI into real-world applications.” He emphasized that the company is at the “beginning of massive scaling” for its Full Self-Driving and Robotaxi initiatives, aiming to revolutionize transportation.
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This ambitious trajectory places increasing pressure on Tesla to achieve record performance in the final months of the year.
Tesla will need another record quarter—if not more—to simply maintain its delivery figures from 2024 and 2023. The recent unveiling of new, slightly lower-priced versions of the Model 3 and Model Y EVs may provide some assistance, yet even in the most favorable scenario, the company appears far from its previous promise of 50% year-over-year growth.
Musk has been steering shareholders, investors, employees, and the broader audience to envision a future beyond the company’s traditional vehicle manufacturing. He has staked Tesla’s future on establishing a vast network of autonomous vehicles that could rival Uber, while also predicting the humanoid robot, Optimus, to become a market frontrunner.
In Wednesday’s letter, Tesla offered limited updates on these ambitious plans. Musk indicated that Tesla might commence production of the third version of Optimus as early as the first quarter of 2026. Although he initially pledged to deliver thousands of robots by year’s end, reports indicate that Tesla has faced production challenges early on with Optimus.
“Bringing Optimus to market is an incredibly complex task,” Musk acknowledged. “It’s not just a walk in the park.”
Nevertheless, Musk continued to share lofty, albeit vague, predictions about Optimus’s potential impact. “We can create a world free of poverty, where everyone has access to top-tier medical care,” he asserted. “Optimus will revolutionize surgery.”
The intensified focus on AI, robotics, and autonomous vehicles, including plans for the two-seater “Cybercab,” will also lead to increased expenses for Tesla in 2026. Taneja added that capital expenditures are set to rise “substantially” due to these projects, alongside a rise in employee-related costs to keep pace in the current competitive landscape for AI talent.
Tesla’s third-quarter results arrive against the backdrop of the company’s proposal to issue $1 trillion in stock options to Musk, which is set for a vote at the upcoming annual shareholder meeting. Both the company and Musk have been fervently advocating for this plan, even as advisory firms like ISS and Glass Lewis recommend against it. However, overwhelming prior support from shareholders suggests this compensation scheme may soon be approved.
Musk has even hinted at the possibility of stepping away from Tesla if the package does not receive approval.
During the Wednesday conference call, he reiterated that his focus is more on the voting power the compensation package would confer than on the monetary value itself.
“I don’t feel comfortable building a robot army only to be removed from the company based on the misguided recommendations of ISS and Glass Lewis—groups that lack insight,” Musk stated. “Their opinions are akin to corporate terrorism.”
This story has been updated with the latest insights from Tesla’s third-quarter conference call.
