Tesla (NASDAQ: TSLA) shares fell in after-hours trading Wednesday as the company reported third-quarter results that failed to meet Wall Street’s earnings expectations, while providing little new detail on its long-awaited Robotaxi initiative. The results come at a critical time for Tesla and the broader electric vehicle sector, as the expiration of U.S. federal EV tax credits and ongoing global trade uncertainty threaten to slow consumer demand and compress margins.

Earnings Miss Despite Record Deliveries

For the third quarter, Tesla posted revenue of $28.01 billion, narrowly surpassing analyst expectations of $26.27 billion, marking a 12% increase year over year. However, adjusted earnings per share came in at $0.50, missing the forecast of $0.54. Operating profit fell 40% to $1.62 billion as the company grappled with lower regulatory credit revenue and rising production costs.

Tesla noted that shifting global trade policies, volatile supply chains, and inflationary pressures are complicating cost management efforts. The company’s adjusted EBITDA of $4.23 billion slightly exceeded estimates, signaling operational resilience even as profit margins contracted.

Deliveries reached 497,099 vehicles, a new record and well above the 462,890 delivered during the same period last year. However, this surge coincided with the final days of the U.S. EV tax credit program, raising questions about the sustainability of sales momentum heading into the next quarter.

Robotaxi Ambitions and AI Transition

While Tesla confirmed the launch of a limited ride-hailing service in the San Francisco Bay Area using its Robotaxi technology, the absence of major updates frustrated investors who have long viewed full autonomy as Tesla’s next transformative leap. Tests continue in Austin, Texas, and California, with further trials rumored in Nevada and Arizona.

Wedbush analyst Dan Ives reaffirmed his bullish stance, calling Tesla’s pivot toward AI-driven autonomy “the most important chapter in its growth story,” estimating that the autonomous vehicle segment alone could be worth $1 trillion to Tesla’s valuation over the coming years.

Still, analysts caution that Tesla’s path to large-scale Robotaxi deployment faces regulatory and technological hurdles, especially as safety concerns prompt scrutiny from state officials. Investors are expected to focus on production updates for the upcoming Cybercab and Optimus robotics projects during the next earnings cycle.

Leadership, Legal Challenges, and Investor Tension

Tesla’s financial performance isn’t the only factor weighing on sentiment. CEO Elon Musk’s proposed $1 trillion pay package has reignited controversy ahead of the company’s November 6 shareholder meeting. Both proxy advisers Glass Lewis and ISS have urged investors to reject the proposal, citing governance and transparency concerns.

Musk’s previous compensation plan remains under legal review by the Delaware Supreme Court after a lower court ruled that shareholders lacked adequate disclosure at the time of approval. The outcome could shape future corporate governance norms across Silicon Valley and beyond.

What Lies Ahead for Tesla and Investors

Tesla’s short-term outlook hinges on its ability to navigate post-tax-credit headwinds while maintaining production momentum. The company expects to rely more heavily on cost discipline, AI-driven efficiencies, and an expanding energy storage business—deploying 12.5 gigawatt-hours this quarter, another record—to offset margin compression.

Investors will also be watching for updates on Tesla’s autonomous roadmap and Musk’s strategic decisions around capital allocation and governance. As competition intensifies and fiscal incentives fade, Tesla’s ability to translate its innovation leadership into sustainable profitability will determine whether the recent stock pullback marks a buying opportunity—or the start of a more cautious phase in the EV revolution.