Auto File-Q3 earnings: The good, the bad and a Tesla twist

By Abhirup Roy

By Abhirup Roy, U.S. Autos Correspondent

Greetings from the Motor City! Now, you haven't heard that in a while!

Though I'm based in foggy San Francisco, from where I decode the rapidly evolving world of electric vehicles, I've just touched down in Detroit. I'm here for Reuters' Automotive USA 2025 conference, kicking off Wednesday, to get a clearer view of the twists, turns and roadblocks facing the U.S. auto industry.

It's shaping up to be an intense couple of days. Top executives from major automakers and suppliers - including Volkswagen, Rivian, Stellantis and Lucid - will join us on stage to discuss everything from software-driven innovation and smart manufacturing to building a resilient supply chain for tomorrow.

There's plenty to unpack. The EV industry is bracing for a demand slowdown after bumper sales last quarter when buyers raced to lock in now-expired tax credits. Adding to the challenge - just as several EV makers plan to launch more affordable vehicles, a looming shortage of chips and rare earths threatens to throw supply chains into disarray.

What's on my agenda outside the conference halls, you ask? Visiting the Henry Ford Museum and exploring Eastern Market top my list - yes, it's my first time in Motown, and I'm ready to explore.

But before I head out, here's today's Auto File...

Today

- Tesla's profit problem

- GM revs up, while Ford faces heat

- Trump's deal spree in Asia

Tesla's profit plummet undermines record revenue

Heading into Tesla's third-quarter results last week, investors, analysts and fans were all revved up for record revenue following its highest quarterly sales, as EV buyers in the U.S. rushed to lock in key tax credits before they expired at the end of September.

But it turns out revenue wasn't the only number that grew. Costs jumped too, as higher tariffs by the Trump administration meant Tesla had to shell out more for parts it imported. That, along with increased spending on research and dwindling income from lucrative regulatory credits, resulted in a 37% plunge in Tesla's bottom line.

There was no word on the conference call on how it plans to ramp up production of the cheaper, stripped-down Model Y and Model 3 variants Tesla launched this month to combat the demand cliff. On a popular investor question on plans for new car models, the company's head of investor relations Travis Axelrod said: "This is not the appropriate venue to cover that, so we're going to have to skip it."

What did get airtime on the call? The Tesla board proposed a $1 trillion pay package for Musk. He and, surprisingly, Tesla CFO Vaibhav Taneja, spent considerable time explaining why shareholders should vote next month in favor of the compensation plan. Musk insisted it's not about the money — it's about voting control. "That's what it comes down to in a nutshell. Like I don't feel comfortable building that robot army if I don't have at least a strong influence," he said, referring to Tesla's Optimus humanoid robots. Tesla chair Robyn Denholm warned in a letter to shareholders on Monday that Musk could leave as CEO if the package was not approved.

Tesla will build a 1 million-unit Optimus production line early next year, according to Musk, and start making the robots by year-end. Musk also kept the robotaxi rave alive, saying he expects Model Ys running on a version of Tesla's full self-driving (FSD) software to operate in eight to 10 metro areas by the end of this year. For context, Musk had told investors in July that robotaxis would serve "half the population of the U.S." by year-end.

The U.S. road safety regulator isn't so sure. NHTSA, which is already probing 2.9 million FSD-equipped Teslas after reports of traffic-safety violations and crashes, said it was seeking information about a new mode dubbed "Mad Max" that operates at higher speeds than other versions.

Essential Reading

- Businesses adapt to Trump's tariffs

- Fed expected to cut rates

- October auto sales hit by EV demand slowdown

"Thank you, Mr President!" say GM and Ford

Investors in GM and Ford have had reason to cheer this past week as the two Detroit majors caught a break on two fronts: sky-high tariff costs on imported parts, and the pressure to spend billions on the EV pivot.

Trump's removal of the tax credits and the pullback of other policies meant to boost EV adoption is expected to hamstring demand – meaning traditional automakers, at least for now, can go back to building their profitable gas-guzzlers. And to offset tariff costs, Trump also approved an order to expand credits for U.S. auto and engine production, allowing companies to receive a credit equal to 3.75% of the suggested retail price for U.S. assembled vehicles through 2030.

Both companies gave Trump a shout-out. GM raised its profit outlook for the year. Ford would have too, but it had to cut its guidance instead as a fire at a critical aluminum supplier is expected to hurt production and cost it $1.5 billion to $2 billion this year.

Third-quarter earnings on the other side of the pond were mixed, too. Porsche swung to an operating loss, highlighting the challenges the German sports car maker faces as a price war with China rages and U.S. tariffs take a toll. Volvo Cars, meanwhile, is showing signs of a turnaround. Six months of aggressive cost-cutting under CEO Hakan Samuelsson, who was brought back to the role this year, are delivering results faster than expected. The company smashed profit forecasts, sending shares up as much as 40%. Renault also beat expectations, helped by popular new models like the Dacia Bigster.

A Flurry of Trade Deals - and Maybe a Big One

Top U.S. and Chinese officials have thrashed out the framework of a trade deal ahead of a meeting this week between Presidents Donald Trump and Xi Jinping. Investors cheered the prospect of a pause in U.S. tariffs and China's rare earth curbs, pushing the S&P 500 up on Monday.

Tensions between the world's two largest economies have upended the auto industry with rising costs and supply chain disruptions, and a truce will come as a major relief. But some aren't popping the champagne just yet — the past has taught them it's not done until it's done.

Either way, Trump signed a string of trade and critical mineral deals across Asia, the latest with Japan, aiming to reduce reliance on China, which has a stranglehold on materials crucial for everything from smartphones to cars.

Fast Laps

- Rivian is laying off over 600 employees as EV demand is seen flagging after tax credits expired. The startup, known for its R1S SUV and R1T pickups, agreed to pay $250 million to settle an IPO fraud lawsuit as it focuses on launching the smaller, more affordable R2 SUV next year.

- Bosch is preparing to furlough some staff and scrambling for alternatives as a dispute between China and the Netherlands over Dutch chipmaker Nexperia has disrupted supplies for the German auto parts supplier and others.

- The Alliance for Automotive Innovation, a group representing nearly all major automakers, urged Trump not to impose tariffs on factory robots and machinery.

- The hack of Jaguar Land Rover, owned by India's Tata Motors, cost the British economy an estimated 1.9 billion pounds ($2.55 billion) and affected over 5,000 organizations, according to an independent cybersecurity body.

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