TLDR
- Tesla sales dropped 23% year-over-year in October across North America, Europe, China, and South Korea, with North American sales falling 25% from September to 45,000 vehicles.
- Wall Street expects Tesla to deliver 440,000 vehicles in Q4, down from nearly 500,000 in Q3 and 496,000 in Q4 2024.
- Tesla stock remained stable, up 9% year-to-date and 26% over 12 months, despite falling sales for the second consecutive year.
- Investors are focused on Tesla’s AI initiatives including self-driving taxis, humanoid robots, and driver assistance subscriptions rather than car sales.
- Elon Musk’s compensation package requires hitting three AI-focused targets: 10 million driver assistance subscriptions, one million robo-taxis, and one million robots.
Tesla sold 23% fewer vehicles in October compared to last year. The drop covered four major markets: North America, Europe, China, and South Korea.
Wells Fargo analyst Colin Langan tracked the industry data. He found North American sales hit about 45,000 vehicles in October.
That represents a 25% drop from September’s nearly 60,000 cars. The federal $7,500 tax credit expired at the end of September, which pushed buyers to purchase earlier.
Langan noted he expected a slowdown in October after the tax credit ended. But foreign markets also showed weakness, which he didn’t anticipate.
Wall Street analysts now expect Tesla to deliver 440,000 vehicles in the fourth quarter. That’s down from almost 500,000 in Q3 and about 496,000 in Q4 2024.
Tesla is on pace for its second straight year of declining global sales. The company is also facing its first-ever annual decline in China.
The stock doesn’t seem to care much. Tesla shares hit an all-time high in December 2024.
Coming into Wednesday trading, the stock was up 9% year-to-date and 26% over 12 months. Shares opened slightly higher before dipping 0.3% to $438.14 in early trading.
Software Over Steel
Investors have shifted their focus from car sales to AI applications. They’re watching Tesla’s plans for self-driving taxis and humanoid robots more closely than delivery numbers.
Tesla’s board has the same priorities. Three of the four operational goals in Elon Musk’s new compensation package center on AI initiatives.
To earn roughly 425 million shares, Musk needs to hit several targets. He must sell cars, but also secure 10 million driver assistance subscriptions.
The package also requires deploying one million robo-taxis and producing one million robots. These goals tell investors where management plans to spend its energy.
Fund managers now view Tesla as an AI platform first. If high-margin software sales scale up, the earnings picture changes fast.
The stock price will likely follow that shift rather than quarterly vehicle counts. This explains why shares have stayed strong despite weak auto sales.
The Bear Case Still Exists
Tesla stock has been flat since the November 6 shareholder meeting. Investors approved Musk’s giant pay package at that meeting.
Shares dropped about $6 from the meeting through Wednesday’s opening. The stock fell three times and rose once during that period.
With Musk secured as CEO, investors are waiting for more AI news. Wells Fargo’s Langan still focuses on traditional metrics.
He rates Tesla shares as a Sell with a $120 price target. That represents a big gap from current prices.
Wall Street analysts remain split on Tesla. Of the 34 analysts who issued ratings in the past three months, 14 recommend buying the stock.
Ten analysts rate it a Hold. Another 10 recommend selling.
The average 12-month price target sits at $382.54. That implies a 14% drop from recent trading levels.
Bulls argue that any delivery miss is temporary if software revenue starts compounding. Bears point to the current sales weakness, especially in China where Tesla faces its first annual decline.
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