Tesla’s record sales quarter has offered the company a reprieve after a terrible start to 2025. But CEO Elon Musk is focused on building a “robot army” and making good on his years-long, unfulfilled promise of self-driving cars — tasks he needs to accomplish if he is to unlock the full value of the $1 trillion compensation package that Tesla wants to award him.
The tension between Tesla’s current automotive-driven business and the AI-centric one that Musk is aiming for has never been more clear.
Tesla delivered a record number of vehicles in the third quarter of 2025, thanks in large part to a rush of customers in the United States who took advantage of the expiring federal EV tax credit. But that record quarter did not lead to greater earnings. In fact, Tesla’s third-quarter profit was still 37% lower than it was in the same quarter last year.
Tesla shipped 497,099 cars in the third quarter, which generated $21.2 billion in automotive revenue — the company’s best revenue figure in more than a year. But Tesla only pulled in a profit of $1.4 billion, up just $200 million from the second quarter of this year, according to a shareholder letter released Wednesday. The record quarter came after an abysmal start to the year for Tesla, which saw sales drop mightily in part because of Musk’s involvement with the Trump administration.
The company explained in the letter that a big increase in operating expenses — 50% higher compared to the third quarter last year — was one of the culprits. That operating expense bump was thanks to spending on AI and other R&D projects, as well as “restructuring” charges of nearly $240 million. Tesla didn’t explain what those restructuring charges were for, but it’s possibly related to the recent decision to shut down the company’s six-year-old Dojo supercomputer project.
Tesla cited tariffs as another drag on profits this past quarter, meaning Musk spent around $300 million to help elect a president who has hurt the company’s business. Tesla’s chief financial officer, Vaibhav Taneja, said on a conference call Wednesday the tariff hit was about $400 million.
“We’re at a critical inflection point for Tesla and our strategy going forward as we bring AI into the real world,” Musk said on the call. Tesla is at the “beginning of scaling, quite massively, Full Self-Driving and Robotaxi, and fundamentally changing the nature of transport,” he said.
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All of this will put even more pressure on the company’s final quarter of the year.
Tesla already needs another record quarter (and then some) if it wants to simply match the number of cars it shipped in 2024 or 2023. The company could get some help from the new slightly cheaper stripped-down versions of the Model 3 and Model Y EVs. But even in that best-case scenario, Tesla is way off the path of 50% year-over-year growth that it once promised to investors and shareholders.
But Musk has spent the last few years trying to get shareholders, investors, employees, and everyone else to look beyond the company’s core business of making and selling cars. He’s bet the future of Tesla on being able to create a vast network of self-driving vehicles that he thinks can challenge Uber. And he thinks the humanoid robot, Optimus, will become the best-selling product ever.
Tesla offered little new info on those programs in Wednesday’s letter. Musk said on the conference call that Tesla may start building the third version of Optimus in the first quarter of 2026. He had once promised to build thousands of the robots by the end of this year, but as The Information has reported, Tesla has run into problems in early production with Optimus.
“Bringing Optimus to market is an incredibly difficult task, to be clear. It’s not like some walk in the park,” Musk said.
But Musk continued Tesla’s gauzy, unspecific claims about how much Optimus will change the world. “You can actually create a world where there is no poverty, where everyone has access to the finest medical care,” he said. “Optimus will be an incredible surgeon.”
The increased focus on AI, robotics, and self-driving cars (including starting production of the two-seater “Cybercab”) will also cost Tesla more next year. Taneja said capital expenditures will increase “substantially” in 2026 thanks to those projects. He also said Tesla has had to increase employee-related spending to stay competitive in the ongoing AI talent war.
Tesla’s third-quarter results come amid the backdrop of the company’s proposal to hand $1 trillion worth of shares to Musk. That plan is up for a vote at the Tesla’s annual shareholder meeting in a few weeks. The company — and Musk — are campaigning hard. While advisor groups like ISS and Glass Lewis are recommending against the pay package, it’s most likely going to pass given the overwhelming support from shareholders on previous efforts.
That hasn’t stopped Musk from threatening to walk away from Tesla if the package isn’t approved.
On Wednesday’s call, he reiterated his claim that he cares more about the voting control the compensation package would afford him than the money.
“I just don’t feel comfortable building robot army here and then being ousted because of some asinine recommendations from ISS and Glass Lewis, who have no friggin’ clue. I mean, those guys are corporate terrorists,” Musk said.
This story has been updated with new information from Tesla’s third-quarter conference call.
