Tesla reported a fall in third quarter profits even as it posted its highest-ever revenue for the period, driven in part by increased US purchases ahead of the expiration of a federal electric-vehicle tax credit.

The company’s attributable net income during the latest quarter slumped 37% to $1.37bn.

The US automaker reported quarterly revenue of $28.09bn, up 12% year‑on‑year.

Automotive revenue increased 8% to $20.36bn.

The group said profitability was impacted by increased R&D expenses and the tariffs.

The R&D expense, including artificial intelligence (AI), rose 56.9% from $1.03bn in Q3 2024 to $1.63bn in Q3 2025.

Vehicle production totalled 447,450 units, down 5% from a year ago, while deliveries reached a record 497,099, up 7% YoY.

The company said: “In Q3, the Tesla team achieved record vehicle deliveries globally, showing strength and growth across all regions, while also achieving record energy storage deployments across the residential, industrial and utility sectors. This strong performance resulted in both record revenue and free cash flow generation in the quarter.”

Free cash flow was nearly $4bn, the company’s highest to date.

Energy storage deployments reached a record 12.5 GWh, up 81% year on year, supported by the continued ramp-up at Megafactory Shanghai and record Powerwall installations.

Through the first three quarters of the year, Tesla produced 1,220,309 vehicles, with output rising each quarter: 362,615 in Q1, 410,244 in Q2 and 447,450 in Q3.

“While we face near-term uncertainty from shifting trade, tariff and fiscal policy, we are focused on long-term growth and value creation. We are prudently making the necessary investments in our business, including future business lines, that we believe will drive incredible value for Tesla and the world across transport, energy and robotics,” its statement read.

Tesla said it expects its size and lean cost base to help it weather changing global market conditions better than rivals, and it believes ongoing artificial intelligence advances will make its offerings the most attractive to customers.

The company added that it is prioritising expansion of its core hardware franchise by pushing deliveries and deployments higher, since those products should generate growing customer value over time through AI-enabled services.