Tesla has seen its profits slide even as it reported record quarterly revenue after US buyers rushed to secure a key tax credit on electric car purchases before it ended last month.

The firm said revenue for the three months to the end of September hit a record $28bn (£21bn), up 12% from the same time last year.

But the company’s profits dropped by 37% for the same period, partly due to extra costs linked to tariffs and research.

The results come ahead of a vote by shareholders in November on a new pay package for chief executive Elon Musk that could be worth as much as $1tn.

Tesla shares were down by around 3.8% in extended trading after the results were announced.

The company’s roughly $1.4tn stock market valuation has been driven in recent months by investor confidence that Musk can deliver on his ambitions to transform Tesla into a global leader in artificial intelligence (AI) and robotics.

But sales of vehicles currently remain its main source of income while those new products are being developed.

Like other car makers around the world, Tesla is facing tough 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 expired at the end of September. But rivals like Ford and Hyundai posted even stronger US sales growth during the same period.

It also offered incentives to entice buyers like five-year interest-free loans and insurance subsidies.

Tesla is also grappling with the levies imposed on imports of car parts and raw materials by US President Donald Trump.

In a call with investors on Wednesday, Tesla’s finance chief Vaibhav Taneja said tariffs cost the firm more than $400m in the last quarter.

Higher expenses linked to research and development, particularly in its AI initiatives, also weighed on Tesla’s profits.

Mr Taneja said he expected that kind of spending to continue to rise.

Read Also: Mogo Microfinance Sued Over Unfair Loan Terms and Hidden Charges

In October, Tesla unveiled cheaper models of two of its best-selling cars in the US, in a bid to lift sales as federal incentives expire.

The company rolled out new versions of its Model Y and Model 3 cars, which are priced at about $5,000 less than earlier versions.

Still, Tesla’s shares fell as investors were underwhelmed by the new cars.

The company has been criticised for being slow in offering more affordable cars, often seen as a reason that it has lost ground to competitors.