Tesla reported record energy storage deployments and overall revenue of $28.1 billion in its third-quarter 2025 earnings on October 22, though operating margins fell sharply. The automotive segment faced challenges from low margins and upcoming tax credit expirations, while the energy business showed strong growth. These results come just before a shareholder vote on CEO Elon Musk's proposed $1 trillion compensation package.
Tesla released its Q3 2025 earnings on October 22, revealing record revenue of $28.1 billion, a 12% increase from $25.18 billion in Q3 2024 and 25% from $22.5 billion in Q2 2025. Automotive sales contributed $21.2 billion, accounting for 96.8% of deliveries from Model 3 and Model Y vehicles, but the segment's gross margin was 17%. In contrast, the energy generation and storage division generated $3.4 billion in revenue, with a 31.4% gross margin yielding $1.07 billion in profit—up from 26.6% last year. Deployments reached 12.5 GWh, an 81% year-over-year rise from 6.9 GWh, spanning residential, commercial, and utility-scale segments.
Operating margin dropped to 5.8% from 10.8% in Q3 2024, with costs of revenue at $23 billion leading to a $5.1 billion gross profit. After $1.6 billion in R&D expenses, operating profit stood at $1.6 billion. For the nine months ending September 30, 2025, total revenue fell 2.9% to $69.9 billion, and gross profit declined 9% to $12.09 billion, impacted by higher operating costs, U.S. trade tariffs exceeding $400 million, and reduced regulatory credit income.
Energy storage innovations included the September launch of Megablock, combining four 5 MWh Megapack 3 units for 20 MWh capacity at 248 MWh AC-per-acre density. CEO Elon Musk highlighted plans for Megapack 4, stating it will “incorporate a lot of what is normally in a substation” for 35 kV output, calling it “the engineering priority for Megapack.” VP Michael Snyder noted strong demand for Megapack and Powerwall into next year, driven by AI data centers and grid needs.
These results precede a November 6 shareholder meeting, with voting on Musk's compensation closing November 5. The package offers equity vesting over 7.5 to 10 years if market cap exceeds $2 trillion up to $8.5 trillion, meeting 12 targets. Board chair Robyn Denholm urged approval, writing, “We could not risk losing the best leader in the industry.” However, proxy firms ISS and Glass Lewis recommended rejection as excessive, while New York comptroller Thomas DiNapoli cited “weak governance” and Musk's actions damaging confidence. Florida's State Board of Administration plans to vote yes for potential value creation.
Challenges loom for Q4, including the U.S. $7,500 EV tax credit expiration and lower-priced models, potentially halving gross profit and leading to a net loss—the first since late 2019.