Tesla shares fall as investors look past a record quarter of vehicle deliveries

AUSTIN - Tesla shares slumped after the automaker posted a record quarter of vehicle sales that will be difficult to replicate now that US electric car subsidies have expired.

The company delivered 497,099 electric vehicles (EVs) worldwide in the most recent quarter, 7.4 per cent more than a year ago. Although the total far exceeds the roughly 439,600 average analyst estimate compiled by Bloomberg, Tesla’s shares fell 5.1 per cent on Oct 2 following a record monthly gain in market capitalisation.

The divergence illustrates how investor sentiment has become increasingly detached from Tesla’s core EV business, focusing instead on the potential profit to be reaped by its still-developing robotaxi, artificial intelligence and robotics ventures, which Mr Musk has said will drive the company’s future market value.

“We see no change to our thesis and believe astute investors are looking beyond near-term delivery volatility to higher-margin” initiatives such as Tesla robotaxis and Optimus humanoid robots, Benchmark analyst Mickey Legg said in a note to clients.

A rush to take advantage of a US$7,500 (S$9,700) tax credit for EV purchases delivered a temporary boost to Tesla’s core automotive business, which languished for several quarters under the weight of an ageing line-up and rising competition. The company also faced a consumer backlash to chief executive Elon Musk’s politics as he worked closely with US President Donald Trump earlier in 2025.

The phase-out of EV tax credits in the US after Sept 30 helped drive widespread demand for EVs from the likes of General Motors, Ford Motor and Hyundai Motor in the last quarter.

“This sense of urgency created consumer reaction, and we’re seeing that in the data,” Ms Stephanie Valdez Streaty, director of industry insights at Cox Automotive, said on Bloomberg Television. “It’s going to be challenging going forward,” she added, predicting a slowdown in the fourth quarter.

Tesla’s deliveries tally offers a preview of the earnings results scheduled for Oct 22. In November, the company will hold its annual general meeting, where investors will vote on a new pay package for Mr Musk potentially worth US$1 trillion.  A group of Tesla shareholders and several state officials urged investors to vote against the compensation, a regulatory filing showed on Oct 2.

Tesla has yet to offer many details about the more affordable version of the Model Y that could help buoy sales now that federal EV tax credits have ceased in the US. Executives have said that while initial production started in June, they elected to put off the launch until the fourth quarter and cautioned that output will ramp up slower than initially expected.

While the tax credit expiration boosted third-quarter sales, the pull-forward effect could mean weaker EV demand in the final months of the year. Mr Musk has warned Tesla could face several “rough quarters” after the incentives go away and before the company’s autonomous vehicles deploy at scale.

“While the numbers were better than expected, we think it is important to highlight the data is backward-looking,” said Mr Garrett Nelson, an equity analyst at CFRA Research.

“Looking ahead, we think there are still major questions regarding the earnings impact of legislative changes on the tradeable emissions credit market and EV demand in an unsubsidised US market.”

Aside from the tax credit, the Trump administration has also moved to unwind fuel economy and emissions requirements, choking off regulatory credit revenue that supported Tesla for years.

Wall Street is still expecting Tesla to log its second consecutive annual sales decline.

Analysts surveyed by Bloomberg project the company will deliver around 1.61 million vehicles in 2025, down from 1.79 million in 2024. BLOOMBERG