Tesla sales spiked in the third quarter as US buyers rushed to take advantage of the electric vehicle (EV) tax credits that were eliminated under President Donald Trump’s swept tax bill passed this year.
On Thursday, the automaker reported a 7.4% increase in sales compared to the same period last year, as demand was driven by customers considering purchasing before credits officially expired at the end of September.
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Sales jumped to 497,099 cars in the quarter, compared to 462,890 in the third quarter last year.
Tesla also offered 481,166 units of the Model 3 compact sedan and Model Y crossover in the quarter, well above Wall Street’s expectations.
The Elon Musk-led automaker frequently spoke about the expiration dates of tax credits and used it along with discounts and financing transactions to facilitate sales and leases of EVs. Investors are worried as sales are expected to drop as the $7,500 federal tax credit is gone.
“Third quarter was strong, but we expect sales in the fourth quarter to fall in line with the first half, which is primarily due to the expiration of US tax credits,” said Seth Goldstein, senior equity analyst at Morningstar.
The automaker plans to report quarterly results on October 22nd.
According to the visible Alpha, delivery is expected to be 1.61 million cars a year-round delivery, less than 10% from 2024. Tesla is required to deliver 389,498 vehicles in the fourth quarter.
In China, Tesla began streaming its six-seat Model YL in September, a family-centered variant that was expected to drive demand in the world’s largest EV market.
Meanwhile, EV maker Libian lowered the midpoint of its annual delivery forecast on Thursday, but defeated quarterly delivery estimates due to increased demand from buyers rushing to take advantage of the tax credit.
Europe remained a weakness as rivals actively promoted plug-in hybrids and Chinese EV brands began to gain position in the hyper-competitive market.
According to data from the European Automobile Manufacturers Association, European sales in August, including the UK, fell 22.5% from the previous year, reducing market share to 1.5%.
Cheap models are coming
Tesla has slowed the deployment of the US low-cost Model Y and pushed timing for months with its final plan to build variants in China and Europe.
Analysts said Tesla’s ability to cushion post-credit slowdowns is heavily dependent on pushing to low-cost models.
“The challenge now is to address the potential slowdown that continues, so a new, more affordable model will be important to maintain momentum,” said Matt Brittosman, senior equity analyst at Hargreaves Lansdown, who personally owns Tesla’s stock.
The peeled version is designed to be produced at about 20% cheaper than the updated Model Y, and by 2026 it will be able to scale to about 250,000 units per year in the US.
Investors believe it can help Tesla in the long run.
“We expect EV demand to fall with the expiration date of the EV tax credit, which was a big bounceback quarter for (Tesla) to lay the foundation for delivery, but there’s still more work to do to gain further position from a delivery perspective.”
Tesla Holdings is a major part of Musk’s wealth, and the recent surge in the company’s stock price made his net worth violated the $500 million mark on Wednesday, strengthening his position as the wealthiest person in the world.
The company’s board of directors proposed a shareholder vote for a new CEO award that could grant MUSK worth around 12%, worth up to $1 trillion, if performance and valuation targets are met.
The billionaires have sought to position Tesla more than as a technology company by focusing on AI-based autonomous driving systems, Robotaxis, and humanoid robots.
Stocks fell 1.3% on Wall Street at 11:30am (15:30 GMT) in New York.
