September deliveries were up 7% y/y (463k), essentially in line with expectations. I was expecting a slight miss, predicting deliveries would be up 4% y/y (452k) due to the company facing triple demand headwinds. This is positive, as it marks a return to growth after being down 5% in June and 9% in March.

The three headwinds:

1. The macro: The broader auto industry declined in September, with GM, Stellantis FCA, Toyota, and Ford all reporting an average 8% y/y decline in ICE sales. One potential negative for Tesla is that Ford’s EV sales were up 12% y/y (hybrid+38% y/y), outpacing Tesla’s global 7% rise. However, it’s worth noting that Ford’s U.S. EV sales are coming off a base that was 1/9th the size of Tesla’s U.S. deliveries, so the law of large numbers works in Ford’s favor. Since Tesla doesn’t report sales by region, it’s unclear how Tesla’s U.S. sales in September compared to Ford’s. My sense is that Tesla’s U.S. sales slightly lagged the rest of the world and were up low single digits for the quarter. Putting it all together, while Tesla likely lost fractional EV market share in the U.S. during the quarter, I believe the rate of decline is less than what most investors are expecting. By 2030, I believe Tesla’s U.S. market share will be above 40%, compared to about 50% today, and well above most investors’ belief that market share will drop closer to 20%.
2. EV subsidies in Europe have declined. We analyzed the change in EV subsidies over the past year in the UK, Germany, France, and Norway, which together account for about 20% of total sales, and found an average decline in subsidies of 35%. It’s worth noting that the UK entirely eliminated its tax break, which significantly impacted the overall figures. If we exclude the UK, the average decline in subsidies would be 24%.
3. Elon’s increased political speak: I generally avoid commenting on politics, but it’s worth noting that Elon’s political commentary has increased over the past four months, which may present a headwind to sales. Given that consumers are hyper-sensitive about politics and more than half of Tesla’s buyers lean politically left, this dynamic may have reduced deliveries by 5-10k during the quarter. This suggests U.S. numbers would have been 4% higher, and overall numbers just under 2% higher if not for the political dynamic.

One explanation for the decline in TSLA shares is related to the fact that the company produced about 1.5% more cars than they delivered, suggesting that inventory levels increased. Higher inventories are a red flag for investors, as they can be an early indicator of slipping demand. Looking back over the past five quarters, the September quarter’s deliveries-to-production ratio was in line with historical ranges.

Looking beyond the September deliveries, 2025 is likely be another transition year. Specifically, what the company unveils at the October 10th ‘We, Robot’ event will have a measurable impact on next year’s numbers. If a new, lower-priced ($25k) model is in the works and begins ramping late in 2025, the first three quarters of next year could be at risk as some buyers may hold off on purchasing until the new model is released. We’ll know more next week about the timing of new products, which will impact my estimates for next year. Currently, I expect the $25k model to begin ramping in early 2026, and therefore I’m forecasting 5% year-over-year delivery growth in 2025, compared to the Street’s estimate of 12%. Beyond 2025, growth should accelerate to above 20%. Here’s how the Street’s delivery estimates compare to mine over the next several years:

Street:

• 2025 – 12% (2.0m)
• 2026 – 19% (2.4m)
• 2027 – 22% (2.9m)
• 2028 – 15% (3.3m)

Deepwater:

• 2025 – 5% (1.9m)
• 2026 – 20% (2.3m)
• 2027 – 33% (3.0m)
• 2028 – 17% (3.5m)

As a side note; it’s hard to believe that two years ago the Street called for closer to 5m deliveries in 2028. The EV Winter is having a big impact on long-term analyst expectations.

Disclaimer