Tesla's profits fell even as it reported record quarterly revenue after U.S. buyers rushed to claim a key tax break on electric vehicle purchases before it expired last month.
The firm said revenue in the three months to the end of September reached a record $28bn (£21bn), up 12% on the same period last year.
However, the company's profits fell 37% over the same period, partly due to additional costs associated with tariffs and research.
The results come ahead of a shareholder vote in November on a new pay package for CEO Elon Musk that could be worth up to $1 trillion.
Tesla shares fell about 3.8% in extended trading after the results were announced.
The company's stock market valuation of about $1.4 trillion in recent months has been driven by investor confidence that Musk can realize his ambitions of making Tesla a global leader in artificial intelligence (AI) and robotics.
But car sales currently remain the main source of income while new products are developed.
Like other automakers around the world, Tesla faces stiff competition from Chinese rivals such as BYD.
Tesla reversed a streak of declining quarterly sales as American buyers rushed to claim federal tax credits of up to $7,500 before they expire at the end of September. But rivals such as Ford and Hyundai posted even stronger U.S. sales growth over the same period.
During the quarter, Tesla introduced a six-seat version of its best-selling car, the Model Y, which was particularly successful in China.
It also offered incentives to attract buyers, such as five-year interest-free loans and insurance subsidies.
Tesla is also fighting taxes imposed by US President Donald Trump on imports of auto parts and raw materials.
In a call with investors on Wednesday, Tesla CFO Vaibhav Taneja said the tariffs cost the company more than $400 million in the most recent quarter.
Tesla's earnings were also impacted by higher costs related to research and development, especially in artificial intelligence initiatives.
Mr. Taneja said he expects such costs to continue to rise.
In October Tesla introduced cheaper models two of its best-selling vehicles in the U.S., seeking to boost sales as federal incentives expire.
The company has released new versions of its Model Y and Model 3 vehicles that cost about $5,000 less than previous versions.
However, Tesla shares fell as investors were less than enthusiastic about the new cars.
The company has been criticized for being slow to offer more affordable cars, which is often seen as the reason it is behind rivals.
