LONDON, Oct 23 — Tesla’s shares fell 3 per cent before the bell today, as the electric vehicle maker’s quarterly profit fell short of market estimates despite record sales, hit by rising costs and fading regulatory credits.

The company’s fourth consecutive profit miss shows that even Tesla is not immune to the cost crunch gripping the auto sector, as President Donald Trump radically overhauls US policy.

Tesla shares have swung wildly in 2025, falling as much as 39 per cent through March as weak demand and CEO Elon Musk’s ties to the Trump administration sparked political backlash and boycott calls.

Musk’s repeated pitch for a future built on AI, robotics and self-driving technology has helped fuel investor enthusiasm and lift Tesla’s stock since then, with the company gaining nearly 9 per cent so far this year. Yet, the stock remains among the laggards in the ‘Magnificent 7’ group of mega-cap stocks.

“Near-term sentiment was always going to be fragile after the run-up over the past six months, so the relatively small pullback feels like a non-event by Tesla’s standards,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown, who holds shares in Tesla.

Record EV sales helped Tesla beat third-quarter revenue estimates, fuelled by a surge in US buyers racing to secure expiring tax incentives. However, the phase-out of key tax credits is expected to dent demand for Tesla and other EV makers through the rest of the year.

To counter softening demand, Tesla launched stripped-down “Standard” variants of its Model Y and Model 3 earlier this month, cutting prices by up to US$5,500 (RM23,259).

Tesla’s quarterly costs were further inflated by more than US$400 million in Trump-imposed auto-part tariffs, Chief Financial Officer Vaibhav Taneja said, adding to pressure from expiring tax and regulatory credits.

Despite intensifying investor scrutiny, Tesla’s latest report shed little light on the steep costs and uncertain timeline of its AI and self-driving ambitions.

Tesla’s upcoming vote on Elon Musk’s compensation could be pivotal in retaining him as the company’s “war-time” CEO, analysts have said. — Reuters