Tesla surges, is spring coming?

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Tesla Deliveries

The third quarter has just ended, and American car companies are one after another announcing the latest sales or delivery data. Today, one of the most closely watched reports on the market is Tesla's. This quarter, Tesla delivered a total of 486,500 vehicles worldwide, surpassing market expectations. Although this is still about a 2% year-on-year decrease, delivery numbers have risen compared to the second quarter. Tesla shares rose over 5% during intraday trading.

According to CNBC, there are two main reasons for the year-on-year decline. One is that last year's base was exceptionally high. In Q3 last year, US consumers rushed to buy electric vehicles before the federal government’s EV purchase incentive expired, helping Tesla set a record for its highest single-quarter delivery volume. This incentive was part of the Inflation Reduction Act signed by Biden in 2022, which was supposed to last until 2032, but Trump’s spending bill brought it to an early end, so it will no longer be available after September 30, 2025.

The other reason is that in the second quarter of this year, Tesla delivered about 28,000 more cars than it produced. This means the company sold some vehicles produced earlier that were still in inventory. Therefore, maintaining a high delivery figure in the third quarter was quite challenging. Production this quarter was 464,400 vehicles, still lower than deliveries, indicating that inventory continues to be depleted.

CNBC believes Tesla’s better-than-expected results were mainly due to a rebound in the European market. Last year, Elon Musk’s political stance triggered a backlash in Europe, hurting sales, but this year things have clearly recovered. In the first eight months of this year, Tesla’s new car registrations in the EU grew 66% year-on-year, and in August alone, the growth was about 53%. Additionally, exports from Tesla’s Shanghai factory nearly doubled in both July and August, helping offset some of the competitive pressure in the Chinese market.

Tesla faces pressure from competition with Chinese EV manufacturers like BYD and Xiaomi, whose cars are cheaper and often more innovative. Meanwhile, the US federal EV tax incentives have also ended. These challenges are reflected in Tesla’s stock price. As of yesterday, Tesla shares are down over 21% year-to-date, making it the worst performer among all large tech stocks.

The impact of the subsidy’s cancellation can also be seen in data released by Ford today, with EV sales plummeting about 80% year-on-year and the already discontinued F-150 Lightning dropping 97.1%. It's evident that US demand for EVs has taken a significant hit after subsidies were withdrawn.

Now, back to Tesla. From a full-year perspective, Tesla only needs to deliver 311,500 vehicles in Q4 to avoid a third consecutive year of declining annual deliveries. Although Elon Musk is now constantly talking about AI, Robotaxi, and Optimus, the market still focuses on quarterly vehicle delivery numbers because automobiles remain Tesla’s most important source of revenue.

Now, that’s the news. Let’s check out the insights of Kevin, a US investment analyst who knows Tesla best.

Kevin believes that Tesla’s auto business has shown signs of stabilizing, which is a positive development for the company. Looking ahead, oil prices will be a key variable. The International Energy Agency notes that rising oil prices are prompting more consumers to reconsider EVs as a way to reduce fuel costs. If oil prices stay high for a long period, considerations around fuel efficiency and operating costs will become increasingly important when buying a car. For the entire EV industry, this will provide support for demand, and Tesla stands to benefit.

Besides oil prices, the maturing FSD (Full Self-Driving) technology can also help boost Tesla sales further. Europe is a good example: Tesla’s FSD has recently been approved in 8 European countries, so consumers will factor in autonomous driving capabilities when buying cars. Kevin believes that as FSD features expand and become available in more regions, it will continue to drive sales growth.

As Tesla’s core auto business stabilizes, the two growing segments—energy storage and Robotaxi—will have even greater potential to fuel company growth. This quarter, Tesla deployed 13.7 GWh of energy storage products, increasing both year-on-year and quarter-on-quarter. With AI data centers expanding, future demand for electricity and storage is likely to keep rising. Tesla also plans to invest over $25 billion this year in factory expansion and Robotaxi development. This week, the company secured $30 billion in new loans and credit lines, showing its continued strong commitment to these areas.

Therefore, Kevin thinks Tesla’s automotive business is likely to stabilize gradually, and energy storage plus Robotaxi could provide new growth opportunities, leaving plenty of room for the stock price to rise further. The next critical test will be Q3 earnings on October 21, and the US Investment team will bring you in-depth earnings analysis as soon as possible—stay tuned.

[US Investment Pro]

US Investment Pro closely tracks Tesla, providing in-depth analysis, including detailed breakdowns of Tesla's Robotaxi program, fundamentals analysis, thorough post-earnings reports, and Tesla's daily abnormal movements—making it extremely useful for those seeking an in-depth understanding of Tesla.

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