(MENAFN) Tesla’s net income tumbled 37% year-over-year in the third quarter, dropping to $1.37 billion from $2.17 billion, even as sales rebounded following earlier declines and a surge in consumer demand tied to the ending federal tax credit.

The US electric vehicle leader posted $28.1 billion in revenue for the June-September period, marking a 12% increase from $25.18 billion the previous year. Automotive revenue also climbed 6% to $21.2 billion, up from $20 billion during the same quarter last year.

Consumers rushed to buy electric vehicles before the $7,500 federal tax credit expired at the end of September—a tax incentive eliminated under President Donald Trump’s funding package. This urgency pushed sales into the quarter but did not prevent an overall profit drop.

Automotive regulatory credit revenue sharply declined by 44%, falling from $739 million to $417 million, further squeezing earnings.

Tesla acknowledged ongoing uncertainty tied to global trade shifts and fiscal policy changes, stating, "it is difficult to measure the impacts of shifting global trade and fiscal policies on the automotive and energy supply chains, our cost structure, and demand for durable goods and related services," as reported by media.

CEO Elon Musk and CFO Vaibhav Taneja warned investors about the effects of rising tariff costs and the end of tax incentives during Tesla’s July earnings call.

While sales growth resumed overall, Tesla faced continued setbacks in Europe, where declining demand was fueled by backlash against Musk, political controversies, and rising competition from EV makers like Volkswagen and BYD.

After a sharp drop early in 2025, Tesla’s stock has recovered roughly 9% this year. However, shares dipped about 1.8% in after-hours trading following the earnings release on Wednesday.

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