Tesla reports third-quarter earnings after the stock market close Wednesday. Analysts have increased their profit forecasts somewhat in October, but still expect another big year-earlier decline despite record EV deliveries as U.S. tax credits expired.
Analyst consensus pegs third-quarter EPS falling 24% to 55 cents vs. 72 cents in Q3 2024, according to FactSet. Revenue should climb about 4.6% to $26.33 billion. Even Wedbush Securities analyst Dan Ives, a longtime Tesla bull, forecasts Tesla Q3 profit coming in at just 51 cents per share. The closest Q3 2025 analyst estimate to Tesla's performance a year ago is 69 cents per share, according to FactSet.
However, these are the reasons why Tesla could be set to beat earnings and revenue expectations.
Tesla reported in early October that it delivered a record 497,099 vehicles in Q3, topping the prior all-time high of 495,570 in Q4 2024, buoyed by the now-expired $7,500 U.S. EV tax credit. Those booming sales also slashed EV inventories, which should be good for margins. So should U.S. sales' outsized share of overall deliveries, as opposed to the China-led deliveries in recent quarters.
Tesla also deployed a record 12.5 gigawatt-hours of energy storage in Q3 vs. 9.6 GWh in Q2 and 6.9 GWh in Q3 2024.
These are all positives for Q3 financials, even as Cybertruck sales lag. President Donald Trump's tariff policy could be hitting Tesla's energy storage business.
To this point, Barclays analyst Dan Levy on Thursday raised his Tesla price target to 350 from 275 and kept an equal weight rating. Levy wrote that Tesla enters Q3 earnings with two contrasting "stories," Those narratives are autonomous driving and AI, coupled with CEO Elon Musk's proposed compensation package, along with a "weakening fundamental backdrop."
Barclays expects a Q3 EPS beat, supported by gross margin and volume strength, but is "leaning neutral to slightly negative" into the print following a recent rally given its "muted view" on fundamentals going forward.
What Could Be Weighing On Earnings
Arguably the largest drag on Tesla's financials is the end to the zero-emission vehicle (ZEV) credits and corporate average fuel economy fines. Tesla has long been a major beneficiary of the ZEV credits program, as well as the CAFE rules. That is because automakers that failed to meet federal emissions requirements would often purchase credits from the EV giant or another company with credits to spare.
Tesla earned $2.8 billion in revenue from selling credits in 2024, 16% of its total gross profit. William Blair analysts estimate that 75% of Tesla's regulatory credit revenue has been related to the CAFE standards.
Following Tesla's record-setting vehicle deliveries, William Blair analyst Jed Dorsheimer expects 46 cents per share in Q3 profit. That is just 1-cent higher than his previous estimates that included the negative impact from the ending regulatory credit revenue.
Tesla could still have some ZEV credits that it could recognize in Q3. It still gets ZEV credits from Europe, but declining sales there will limit that as well.
The loss of U.S. ZEV credits will be a significant drag on profits for the next few quarters.
Earnings Call Focus
Investor and analyst attention during Wednesday's earnings release and conference call will be on Musk's projections for robotaxi scaling and autonomy. Investors could also keep an eye out in the third-quarter regulatory filings for information on how much Tesla has tied up in ongoing lawsuits and advertisement campaigns.
Currently, the top three questions, as voted for by retail investors, to be asked during the earnings call are:
What are the plans for new car models? Will Tesla build compact car models leveraging the unboxed Cybercab platform? Will Tesla build a traditional SUV and pickup truck in the Cybertruck platform?
What are the latest Robotaxi metrics (fleet size, cumulative miles, rides completed, intervention rates), and when will safety drivers be removed? What are the obstacles still preventing unsupervised FSD from being deployed to customer vehicles?
What are the present challenges in bringing Optimus to market considering app control software, engineering hardware, training general mobility models, training task specific models, training voice models, implementing manufacturing and establishing supply chains?
Tesla Stock Performance
TSLA advanced 2.5% to 439.31 during Friday's stock market after falling 1.5% to 428.75 on Thursday. Tesla stock ended Friday's stock market up 6.2% on the week, based primarily on a strong move Monday where it regained its 21-day exponential moving average.
Tesla stock is on the IBD Leaderboard watchlist.
The stock now has a 13%-deep handle with a 470.75 buy point on a very deep base going back to late December. The handle has had some big, high-volume tumbles, but is starting to tighten up.
Getting above Wednesday's high of 440.51 could offer an early trendline entry for aggressive investors. However, the current volatile stock market and upcoming earnings raise the risks.
Investors can keep tabs on the IBD 50 list of top growth stocks and IBD SwingTrader along with the IBD Sector Leaders list.
Tesla stock has a 77 Composite Rating out of a best-possible 99. The stock also has a 90 Relative Strength Rating and a 54 EPS Rating.
Please follow Kit Norton on X @KitNorton for more coverage.
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