Tesla, the electric car company run by Elon Musk, saw record sales in its third quarter, although that was not enough of a boost for the electric carmaker to avoid a sharp drop in profits.
Between July and September, Tesla sold more than 497,000 cars, record sales equivalent to a 29 percent increase over the second quarter and a seven percent year-over-year increase, according to earnings data released Wednesday.
Analysis attributes the strong sales to demand from U.S. customers who raced to place orders before a $7,500 federal tax credit for the electric cars expired at the end of September.
Despite the strong sales, profits fell, with net income falling 37 percent in the third quarter as third-quarter earnings fell to $1.4 billion from $2.2 billion a year earlier.
This also marked the third consecutive quarter in which profits fell.
Tesla executives attributed this headwind to falling revenues from carbon credits, tariff costs and the drain on investment in artificial intelligence R&D.
Looking ahead, Tesla told investors the company would remove safety drivers from its robot axis in Austin by the end of the year and to expect the debut of the next prototype of its Optimus robot in February or March.
The company’s Cybercab autonomous vehicle is scheduled for production in the second quarter of next year.
On an investor call, Musk urged shareholders to back a proposed pay package that could make the executive the world’s first trillionaire, calling the terms a key way to strengthen his control over Tesla as it continues to build advanced robotics and AI systems to integrate into its cars and manufacturing processes.
“My basic concern with how much voice control I have at Tesla is, if I build this huge robot army, can I just be deposed in the future?” he reportedly said. “I don’t feel comfortable building that robot army if I don’t at least have some say in it.”
The company has had a tough 2025, with Tesla facing boycotts, attacks on dealers and soured public sentiment in some quarters in response to Musk’s heavy, if short-lived, involvement with the Trump administration through its DOGE savings initiative.