Even with record-breaking car sales, Tesla’s profits have taken a significant hit in the latest quarter.

A surge in demand for electric vehicles ahead of the expiration of U.S. tax credits has revitalized Tesla’s declining sales figures, enabling the firm to exceed some Wall Street forecasts during its latest fiscal quarter. Nonetheless, it fell short of profit expectations, resulting in a decline in its stock price during after-hours trading.

Tesla’s third-quarter earnings were reported at $0.50 per share, just below the anticipated $0.54 from analysts. The company’s sales, however, surpassed Wall Street’s expectations of $26.457 billion. Operating income stood at $1.62 billion, slightly under the forecast of $1.65 billion, with net income down 37% from $2.2 billion to $1.4 billion.

Deliveries for Tesla in the third quarter saw a notable increase since the beginning of the year. Analysts attribute this rise to consumers rushing to secure electric vehicle tax credits that lapsed at the end of the previous month. The discontinuation of these EV credits, as a result of President Donald Trump’s One Big Beautiful Bill Act, fueled a public rift between Musk and the president and continues to influence the company’s sales forecasts.

In its earnings releases, the company repeatedly highlights its optimistic strides in enhancing AI software and self-driving technology while also mentioning “changes in trade, tariffs, and fiscal policy” as obstacles it is facing.

“No one can replicate what real-world AI can achieve,” Musk stated during a conference call with investors. He also claimed that Tesla’s Optimus robot, which received minimal mention during the earnings call, could potentially be “the largest product ever created.”

“With Optimus and autonomous driving, we believe we can truly create a world without poverty,” Musk asserted. He further introduced a proposed $1 trillion pay package designed to safeguard Tesla from being “isolated” if it develops an “army of robots.”

This earnings report emerges at a critical juncture for both Tesla and Musk, as the CEO seeks investor endorsement for an extraordinary $1 trillion pay package in a forthcoming vote next month. This package depends on Tesla achieving several ambitious milestones, including attaining an $8.5 trillion market cap over the next decade.

So far, two proxy advisory firms have suggested rejecting the extravagant pay package, despite Musk’s substantial support base among Tesla fans and investors eager to please him. Glass Lewis and Institutional Shareholder Services (ISS) provide guidance on how shareholders should cast their votes. As reported recently, they have recommended against the proposed multi-trillion dollar compensation package.

During the investor call this Wednesday, Musk made various claims regarding the future of Tesla’s robotaxi ride-sharing service. He informed investors that the robotaxi initiative—which includes a safety driver in the self-driving vehicle for emergencies—will soon launch in Austin, with plans to remove the driver entirely. Recent weeks have seen major U.S. transportation safety regulators announce: an investigation into traffic safety violations and crashes related to Tesla’s fully autonomous driving technology.

This week, Musk insulted U.S. Transportation Secretary Sean Duffy through a series of posts, including labeling him “Sean Dummy” and sharing calls for his dismissal. Duffy, who also serves as NASA’s acting administrator, indicated Monday that he would resume bidding on contracts for the space agency’s Artemis moon program due to Musk’s SpaceX falling behind schedule.

Shareholders are set to vote on Musk’s $1 trillion compensation proposal during the company’s annual meeting on November 6. Both Tesla and Musk have pushed back against criticisms of the proposal, with the company labeling ISS’s recommendation against the pay package as “baseless and meaningless” in an extensive post on X. Musk hinted in a post on X that he might consider departing from the company if his pay package doesn’t secure approval and accused ISS and Glass Lewis of engaging in “corporate terrorism” during a conference call with investors.

Tesla has experienced a rocky year, marked by heightened competition, the loss of key tax credits, and Musk’s tumultuous leadership. The company reported declines in profits and revenue in the previous quarter. Musk’s political actions, including his prominent role in the Trump administration and promotion of far-right movements, have sparked widespread backlash and fostered anti-Tesla sentiments following a drop in the company’s stock price earlier this year.

While Tesla’s stock has seen significant growth over the past six months, Musk has actively been promoting self-driving taxis and robotics as future income streams. Just last month, he claimed that Tesla’s Optimus robot, a humanoid machine still in development and unavailable for purchase, could eventually represent 80% of the company’s revenue. Musk has made similarly grand declarations about robotaxis populating cities globally, continually extending the timeline for their anticipated rollout.

Recently, Tesla introduced a long-anticipated, more affordable sedan, the Model Y, aimed at improving tepid sales. This new sedan line has faced criticism from some analysts due to its starting prices of $39,990 and $36,990, which are significantly higher than those of lower-priced rivals in China. Consequently, Tesla’s stock price fell shortly after the launch. Additionally, the Cybertruck, which debuted in 2024, has not made a substantial impact on overall sales.