ii view: Tesla vehicle demand slows
A Mag 7 company with a strong record for innovation. We assess prospects at the start of this new year.
6th January 2026 12:06
by Keith Bowman from interactive investor
Elon Musk and his Tesla company logo. Photo: Vincent Feuray/Hans Lucas/AFP via Getty Images.
Fourth-quarter and full-year update to 31 December
- Deliveries of 418,227 vehicles, down from 497,099 the previous quarter
- Total production of 434,358 vehicles, down from 447,450 vehicles the previous quarter
- Annual 2025 deliveries of 1,636,129, down from 1,789,226 in 2024
- Annual 2025 production of 1,654,667, down from 1,773,443 in 2024
- Annual 2025 energy storage deployments of 46.7 Gigawatt hours (GWh), up from 31.4 GWh in 2024
ii round-up:
Tesla Inc (NASDAQ:TSLA) detailed quarterly vehicle deliveries, the nearest number it gives to sales, below Wall Street forecasts, impacted by intense industry competition and the US government’s previous ending of a $7,500 per vehicle tax related discount.
Fourth-quarter deliveries of 418,227 vehicles was down from 497,099 in Q3, missing analyst estimates of 423,000 vehicles. Full year deliveries for 2025 of 1,636,129 was lower than the 1,789,226 achieved in 2024. Total annual deployments of energy related systems of 46.7 GWh rose from 31.4 GWh in 2024.
Shares in the Nasdaq 100 company fell 2% in post US trading having come into this latest news up by 11% in 2025. US rival Ford Motor Co (NYSE:F) rose by a third last year and the Nasdaq 100 index climbed by fifth.
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As well as electric vehicles (EVs), Tesla products and interests include self-driving software, the development of a self-driving robotaxi, solar panels and energy storage systems, and humanoid robots.
Shadowing demand and deliveries, Tesla’s production of 1,654,667 vehicles in 2025 was lower than the 1,773,443 recorded in 2024.
Analysts on Wall Street currently estimate 2026 deliveries of 1.59 million vehicles, a potential fall of 2.5% compared to 2025. Energy related systems for 2026 are forecast to rise by just over a third to 64 GWh.
Tesla's fourth-quarter results are scheduled for after US markets close on Wednesday 28 January.
ii view:
Started in 2003 by Martin Eberhard and Marc Tarpenning, Tesla vehicle sales accounted for 75% of total group revenues during the third quarter to late September. The balance of sales was split evenly between the two divisions of Energy Generation and Storage at 12.5% and Services and Other sales, including its network of charging stations, a further 12.5%. Geographically, the US dominated in 2024 with close to half of all revenues, followed by China at just over a fifth, and other markets, including the UK, the balance of close to a third.
For investors, rivals such as Volkswagen AG (XETRA:VOW) and Bayerische Motoren Werke AG (XETRA:BMW) are now actively pushing their own competitively priced EV and hybrid models. EV sales for Chinese company BYD totalled 2.26 million in 2025, exceeding those of Tesla. US trade tariffs were previously highlighted as a factor in raising costs and reducing profits. A key US government tax incentive making Tesla cars cheaper has now been removed, while an estimated price-to-net asset value (NAV) of almost 20 times compares to estimates for rivals at under two times, suggesting the shares are not obviously cheap.
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More favourably, Elon Musk continues to describe Tesla as a technology company, with the developments of self-driving AI fuelled software, a robotaxi, and humanoid robots all potentially generating significant profits in future. Concerns about climate change have not gone away, with governments globally still broadly favouring EVs. Diversity of the geographical location of factories and innovation in manufacturing techniques are aimed at reducing costs, while revenues away from selling cars hit 25% in Q3, up from 20.5% in Q3 2024.
In all, estimates for lower vehicle sales offer grounds for caution. That said, growing demand for other businesses as well as the expected start of production for products such as its Optimus robot are likely to see investors remain interested.
Positives:
- Climate change concerns persist
- Expanding network of superfast charging stations
Negatives:
- Rising competition from other manufacturers
- Potential regulatory hurdles for self-driving vehicles
The average rating of stock market analysts:
Strong hold
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