TMTPOST --   Tesla Inc.   stock   shed nearly 4%   in extended trading on   Wednesday   after   the electric   vehicle ( EV )   giant posted   its   highest ever   quarterly   revenue   and a   steep decline in   earnings, highlighting its profitability pressure amid the   ongoing tariff war   and intense competition.

Credit：Tesla

Tesla ’ s top line bounced back   from   a double-digit decline   in   the   first   half   of the year. Revenue   from July   to September   surged 12% year-over-year ( YoY )   to a new quarterly   record of   $28.1   billion, beating analysts   expected $26.36   billion polled by Bloomberg. That was a   dramatic rebound   given a   12% YoY   decrease in revenue   recorded for the quarter ended in June,   the   sharpest quarterly fall   in more than a decade.

The record revenue was mainly   by an   unusual booming EV   sales   because   consumers rushed to   buy a car   before   the $7,500 U.S. federal tax credit for clean vehicles expired on September   30.  

Tesla at the   start of this month   announced it   globally   delivered 497,099   vehicles for the third quarter,   setting its   quarterly delivery   record. That represented   a   7.4%   YoY   increase   and easily   beating the average Wall   Street   analysts   expected around 456,000   units, with   the widest margin of beat since the first quarter of 2021.   Thanks to the robust delivery, Tesla ’ s vehicle revenue rose 6% YoY to $21.2 billion, the highest in nearly two years.

Tesla   attributed   its strong revenue to the increase   in deliveries, in part offset   by lower   regulatory credit revenue.   The   EV maker   sold $417   million in regulatory credits for   the September quarter with   a 44%   YoY   decline. The income,   hitting the lowest in two   years,   dropped sequentially for five quarters in a row.   The   regulatory   credit   are   expected to continue to   fade away with the   passage of   the   Trump   administration ’ s   budget bill, which eliminated penalties for automakers who exceed emission standards.

Tesla ’ s bottom line lagged   behind Wall   Street anticipation with   a hefty drop. The   diluted earnings per share ( EPS ) for the third   quarter   on non-GAAP basis   slumped 31%   YoY to $0.50   following a 23% YoY decrease three months   earlier. That missed analysts estimated $0.54 per share. Adjusted net   income fell 29% YoY to $1.77   billion   after plunging 23%   for the previous   quarter.  

Tesla ’ s gross margin   fro the September quarter   dropped 1.8   percentage points   YoY to 18%,   still   topping estimates   of 17.2%.   But auto gross margin excluding   regulatory credits   down   1.7%   points YoY   to   15.4%, falling   short of estimated 16.3%.

The   earnings miss reflected an increase in tariffs, increase   in operating   expenses   driven by   artificial intelligence ( AI )   and other research and development ( R&D )   projects, increase in restructuring charges   and lower regulatory   credit revenue, according to Tesla.  

Just like the second   quarter, Tesla   in its shareholder deck or   on its   earnings   call   didn ’ t provide volume   forecast. It   in the deck reiterating   the challenges   in a time   of transition.

"It is difficult to measure the impacts of shifting global trade and fiscal policies on the automotive and energy supply chains, our cost structure and demand for durable goods and related services,"   Tesla wrote. "While we are making prudent investments that will set up our vehicle, energy and other future businesses for growth, the actual results will depend on a variety of factors, including the broader macroeconomic environment, the rate of acceleration of our autonomy efforts and production ramp at our factories."

Tesla is facing   two   major headwinds including the increase in competition and tariffs,   Chief   Financial Officer ( CFO )   Vaibhav Taneja   on   an earnings call   told analysts.   While the ramp of   Gigafactory Shanghai    is helping Tesla   avoid tariffs   as   this factory can   supply the non-U.S.   demand, tariffs imposed by   the Trump administration   cost more than $400 million   for the third   quarter, generally split evenly between the EV business and the energy generation and storage   business,   Taneja   said.