Tesla’s rough year on Wall Street seems to be at an inflection point.
The electric vehicle maker has faced falling sales for nearly two years. Even before Tesla’s CEO jumped into the political fray over a year ago, Tesla (TSLA) saw a growth slowdown that led to falling deliveries for multiple consecutive quarters.
Earlier this year, Tesla reported its second straight quarter of falling revenue with a 12% year-over-year decline to $22.5 billion.
Shrinking sales in Europe drove some of that trend.
While sales have dwindled across the brand’s markets, including North America and China, Europe has seen the most prolonged steady drop.
Tesla EU August struggles (registrations):
- France: -47.7%
- Sweden: -84%
- Denmark: -42%
- Netherlands: -50%
- Italy: -4.4%
Tesla reported a 13.5% decline in second-quarter global sales on Sept. 23 to 384,122 units, missing analyst estimates by about 3,000 units.
Image source: Newsday RM via Getty Images
Tesla turns to lowering prices to deliver more vehicles
Last year, Tesla experienced its first annual sales decline since 2011 after reporting a 1.1% drop in overall deliveries to 1.79 million from 1.81 million the year prior, the AP reported, citing data from analytics firm Global Data.
The company offered steep discounts to boost sales, leading the average sales price to fall to a little more than $41,000, its lowest level since 2020.
U.S. electric vehicle sales had their second-best month ever in July. To help it catch the wave, Tesla dropped its average transaction price 9.1% to $52,949, according to Sherwood News.
Related: Tesla stock forecast reset by analysts after visiting China
Meanwhile, the average EV transaction cost in the U.S. declined 4.2% year over year to $55,689, according to Kelley Blue Book.
However, none of this has mattered to the company’s stock price in recent weeks, and now analysts are saying Tesla stock is ready to break out.
Tesla claws back stock losses, Q3 earnings release could be a big catalyst
Tesla shares were down 1.75% Sept. 23, but the stock has been on a tear over the past four weeks.
Tesla shares have gained more than 25% over the past month, bringing the stock into positive territory for the year after spending most of the first two quarters in the red. Since July, the stock has been up an unbelievable 45%.
For the year, Tesla shares are now up nearly 6%, and analysts at UBS believe that even better times lie ahead.
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UBS analysts led by Patrick Hummel estimate that Tesla’s third-quarter deliveries will reach 475,000. That number represents an increase from its previous view of 431,000 deliveries and would be about 8% above Wall Street’s consensus estimates.
“Our updated view is informed by: Strong deliveries in the U.S. as Tesla pushes, and consumers take advantage of, the $7,500 IRA EV tax credit before its expiry at the end of September 2025,” Hummel wrote in a Sept. 23 note, according to Barron’s (subscription required).
“We believe 3Q25 could be the highest quarterly U.S. deliveries since mid-2023 and potentially the highest ever.”
But the firm acknowledges that Tesla shares are not tied to the company’s quarterly performance.
Tesla shares rise, despite the company’s struggles
Tesla derived 90% of its 2024 revenue and 94% of its gross margin from auto sales.
Still, permabulls like Ark Invest CEO Cathie Wood don’t see Tesla as a car company, believing that what it is doing now pales in comparison to what it will do in the future.
“Our target in five years is $2,600, and our confidence in that number has gone up now that Tesla is commercializing Robotaxis in August and June,” Wood said recently.
The company delivered just 384,122 vehicles in the second quarter, a 13.5% year-over-year decline that missed analyst estimates by about 3,000 units, but the stock has only gone up since then.
“In general, we’d say that the auto business, and numbers overall, have tended not to matter for Tesla stock,” Hummel said in his UBS note.
“We believe when it comes to Tesla, the market is not focused on valuation and rather looking at incremental headlines (which have been, and could continue to remain positive).”
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