Tesla shares traded lower on Wednesday morning as investors awaited the electric vehicle maker’s third-quarter results, expected after the closing bell.
At the time of writing, the Tesla stock was down around 2% to trade at $434.40.
The company is projected to deliver its strongest quarterly earnings so far this year, but analysts warn that the outlook may be less encouraging.
Analysts surveyed by FactSet expect Tesla to post earnings per share of 55 cents on revenue of $27.2 billion for the quarter.
The company delivered a record 497,099 vehicles, exceeding analyst projections by about 54,000 units — a stronger-than-expected performance that could help Tesla beat estimates on both revenue and profit.
However, that figure trails the recorded 72 cents earnings per share during the same quarter last year, underscoring the pressure Tesla faces as it navigates softening US demand and rising competition.
EV sales surge before the tax credit expiry
Tesla’s third-quarter sales were buoyed by a rush of American consumers purchasing electric vehicles before a $7,500 federal tax credit expired on October 1.
That surge in demand helped boost quarterly numbers but is expected to drag down sales in the current quarter, as buyers who would have waited until year-end accelerated purchases to benefit from the incentive.
The expiration of the credit poses a broader challenge for Tesla, which derives nearly half of its revenue from US customers.
Analysts warn that the loss of the incentive could make EVs less affordable and dampen demand across the segment.
What investors should look for in Tesla’s Q3 earnings
Investors will be closely watching Tesla’s management commentary on profit margins during the post-earnings conference call scheduled for 5:30 p.m. Eastern time.
The loss of the federal tax credit could squeeze profitability, especially as Tesla recently introduced lower-priced “standard” versions of its Model Y and Model 3 vehicles to offset higher costs for consumers.
Market participants will also be looking for updates on Tesla’s use of artificial intelligence, particularly its efforts to advance self-driving technology and humanoid robotics.
CEO Elon Musk has emphasised AI as a cornerstone of Tesla’s future growth, with significant commercial prospects expected from the company’s robot line beginning in 2026.
Another area of investor interest is Tesla’s self-driving taxi service, launched in Austin, Texas, in July.
The company has expanded operations within the Austin area but has yet to introduce the service in other cities.
The pace of expansion remains a key uncertainty, as safety and regulatory considerations continue to influence rollout plans.
While predicting post-earnings market reaction is difficult, analysts suggest that any positive updates on AI, robotaxis, or margin stability could lift investor sentiment.
Coming into Wednesday’s session, Tesla shares have gained 95% over the past six months, even as 2026 earnings estimates have fallen roughly 33%, reflecting the growing divide between market optimism and long-term profit expectations.
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