After a rough last quarter results, Tesla recently hit record for vehicle deliveries globally.
Now, its previous quarter was not a positive one, despite most of the Magnificent Seven announced positive growth rates.
Tesla was the exception, posting negative growth on both revenues and profits.
Following its second quarter results, shares dipped. However, Tesla shares rebounded strongly, trading ~US$430, which was up nearly 40% since its 24 July low.
How has the company’s results picked up since then? Let’s dive in!
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1. Tesla’s 3Q2025 strong revenues – but lower operating income
During its 3Q2025 results, Tesla reported a total revenue of US$28 billion. This was up 12% y/y.
This was driven by an increase in vehicle deliveries, along with revenue growth in other categories.
Meanwhile, its operating income stood at US$1.6 billion, reflecting a 5.8% operating margin.
Unlike its healthy revenue, operating income decreased. This quarter’s numbers reflected a 40% y/y drop. The reasons? Higher operating expenses.
Tesla’s AI and R&D projects were one of the main drivers of higher costs. Higher average cost per vehicle was also cited – including lower cost absorption and an increase in tariffs.
2. What’s driving Tesla’s revenues – Automotives
Tesla breaks its revenue into three segments, with automotives accounting for the largest share:
Overall, its total automotive revenue was ~$21 billion. This grew 6% y/y, which wasn’t a surprise given record vehicle sales. The remaining two segments make up the remaining quarter.
Higher growth rates were reported for the other two sectors. Its Energy Generation and Storage segment was up 44% y/y. Meanwhile, its Services and Others segment grew 25% y/y.
The thing is, amidst rising uptake of electric vehicles, Tesla’s leadership in the market is being threatened.
S&P Global Mobility shows the company’s shares in the US EV market have been on a downward trajectory since 2023.
This was also reflected in Tesla’s analysis of its market share in the various regions it serves.
So far, Tesla has produced 447,000 vehicles within the latest quarter. This is 5% less than the production a year before. However, it delivered 497,099 vehicles, a 7% rise y/y.
Model 3 and Model Y continued to account for nearly all of Tesla’s shipments. For the quarter, delivery numbers were up 9% y/y. However, deliveries of its other models fell 29% y/y.
Delivery numbers were largely accounted for by the spike in sales in the US, with an EV tax credit available to consumers until 30 September.
Since then, Tesla has since released its Model Y SUV and Model 3 sedan Standard models. Prices start at US$36,990.
Tesla noted record delivery volumes in South Korea, Taiwan, Japan and Singapore. South Korea being its third largest market behind the US and China.
3. Tesla doubles down on AI and Robotaxi expansion
Tesla continues to invest aggressively in AI and autonomous driving technology. It expanded its Robotaxi service – first launched in Austin, Texas – to the Bay area.
This is an autonomous vehicle taxi service. It relies on camera-only architecture trained on fleet data. The service is being tested in other parts of the US.
And Tesla wants to widen its offering to more locations.
For its hardware segment, Tesla announced a deal to manufacture advanced semiconductors for AI inference and training with Samsung. It also expanded its AI training computer capacity.
4. Strong growth in its Energy Generation and Storage segment
Tesla saw its highest quarterly energy storage deployment. This was 12.5 GWh, which is an 81% jump from a year ago.
Gross profit for the segment increased to ~US$1 billion for this, a 44% growth rate for this smaller segment.
It’s clear Tesla is capitalising on the opportunity here. Within the quarter, it unveiled the Megablock. This is Tesla’s next-generation industrial storage product.
5. Its Services segment support Tesla’s ecosystem
Revenue from Services and Others rose by 25%. This is supported by Tesla’s growing ecosystem of service centres, used-car sales and charging infrastructure. Efforts to grow this segment continue.
Tesla added over 3,500 net new Supercharging stalls, representing an 18% y/y growth of the network.
In September, it also launched its v4 Supercharger cabinets, which has three times the power density and twice the number of stalls versus the previous cabinet version.
This all equates to a higher efficiency, lower cost and faster deployments of power.
7. What I’m watching next for rest of 2025
Tesla said it will invest into its vehicle and energy segments to position itself for future growth. I expect rising capex costs on AI and R&D spending.
Given the tax exemption deadline, expectations are that EV sales were set to slow for the rest of the year.
While Tesla’s newly introduced Standard models provide a possible alternative, some have argued these are still not priced low enough to compete with other options in the market.
My final thoughts
Tesla is still the pioneer in autonomous driving. In fact, it’s one of the fastest growing sectors in AI. And I believe Tesla is evidently well positioned to capture this market.
Headwinds include the impact of the now-expired tax credit on sales. The more affordable option translates to lowered average vehicle selling prices.
This is together with mixed sentiment on whether these are priced low enough. The performance of its segments over the next two quarters will show.
That said, there are other opportunities. Energy generation and Services revenues are on the rise, and Tesla is pumping in efforts to tap on this.
There is also much excitement about its growing Robotaxi service.
This is along with the anticipated Cybercab launch. Cybercab is their purpose-built robotaxi designed for cost-optimised autonomous ride-hailing.
I believe this will remain a key watchpoint. Tesla has the potential to cushion negative pressures of their vehicle sales segments.
However, the company is navigating testing regulations and scalability of this service. So, there is still some runway before the potential of this is realised.
