Tesla’s sales figures hit a new high in the third quarter, giving the company a break after a disastrous start to 2025. But CEO Elon Musk is prioritizing the creation of a “robot army” and fulfilling his long-standing, unmet promise of autonomous vehicles — goals he must achieve to unlock the full value of his $1 trillion compensation package, which Tesla is seeking to grant him.
The contrast between Tesla’s current automotive business and the AI-focused vision that Musk is pursuing has never been sharper.
Tesla delivered a record-breaking number of vehicles in the third quarter of 2025, largely due to a surge of U.S. customers capitalizing on the expiring federal EV tax credit. However, this record quarter did not translate into increased profits. In fact, Tesla’s third-quarter profit was still 37% lower than in the same quarter of the previous year.
Tesla shipped 497,099 cars in the third quarter, generating $21.2 billion in automotive revenue — the company’s highest revenue in over a year. Yet, Tesla’s profit was only $1.4 billion, a mere $200 million increase from the second quarter of this year, according to a shareholder letter released on Wednesday. This record quarter followed a very poor start to the year for Tesla, with sales significantly declining, partly due to Musk’s involvement with the Trump administration.
The company explained in the letter that a substantial rise in operating expenses — 50% higher than the third quarter of the previous year — was a major factor. This increase was due to investments in AI and other R&D projects, as well as “restructuring” costs of nearly $240 million. Tesla did not specify the reasons for these restructuring costs, but they may be related to the recent decision to discontinue the company’s six-year-old Dojo supercomputer project.
Tesla also cited tariffs as a factor negatively impacting profits this past quarter, suggesting that Musk spent around $300 million to help elect a president who has negatively impacted the company’s business. Tesla’s chief financial officer, Vaibhav Taneja, mentioned on a conference call on Wednesday that the tariff impact was approximately $400 million.
“We are at a crucial turning point for Tesla and our future strategy as we integrate AI into the real world,” Musk stated on the call. Tesla is at the “beginning of scaling, quite massively, Full Self-Driving and Robotaxi, and fundamentally transforming the nature of transport,” he said.
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All of this will add even more strain on the company’s final quarter of the year.
Tesla needs another record quarter (and possibly more) just to match the number of cars it shipped in 2024 or 2023. The company might receive some assistance from the new, slightly more affordable, stripped-down versions of the Model 3 and Model Y EVs. However, even in the most optimistic scenario, Tesla is far from achieving the 50% year-over-year growth it once promised to investors and shareholders.
But Musk has been trying to persuade shareholders, investors, employees, and everyone else to look beyond the company’s primary business of manufacturing and selling cars for the past few years. He has staked Tesla’s future on creating a large network of self-driving vehicles that he believes can compete with Uber. And he believes the humanoid robot, Optimus, will become the best-selling product of all time.
Tesla provided little new information on these programs in Wednesday’s letter. Musk mentioned on the conference call that Tesla might begin building the third version of Optimus in the first quarter of 2026. He had previously promised to build thousands of these robots by the end of this year, but, as reported by The Information, Tesla has encountered difficulties in the early stages of Optimus production.
“Bringing Optimus to market is an incredibly challenging task, let’s be clear. It’s not a simple undertaking,” Musk said.
However, Musk continued Tesla’s vague, non-specific claims about the extent to which Optimus will transform the world. “You can actually create a world without poverty, where everyone has access to the best medical care,” he said. “Optimus will be an incredible surgeon.”
The increased emphasis on AI, robotics, and self-driving cars (including initiating production of the two-seater “Cybercab”) will also increase Tesla’s expenses next year. Taneja stated that capital expenditures will increase “substantially” in 2026 due to these projects. He also mentioned that Tesla has had to increase employee-related spending to remain competitive in the ongoing AI talent war.
Tesla’s third-quarter results are released against the backdrop of the company’s proposal to grant $1 trillion worth of shares to Musk. This plan is scheduled for a vote at Tesla’s annual shareholder meeting in a few weeks. The company — and Musk — are actively campaigning for it. While advisor groups such as ISS and Glass Lewis are advising against the pay package, it is likely to pass, given the overwhelming support from shareholders in previous efforts.
This has not prevented Musk from threatening to leave Tesla if the package is not approved.
During Wednesday’s call, he reiterated his claim that he values the voting control the compensation package would give him more than the money itself.
“I’m just not comfortable building a 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.
