Updated Version 2 - Tesla's quarterly deliveries exceed expectations as European demand recovers

Updated stock price data in the second paragraph, added analyst comments, chart, details, and background information

Anhata Rooprai/Akash Sriram

Reuters, October 2 - Tesla TSLA.O reported third-quarter deliveries on Friday that surpassed Wall Street expectations, as a rebound in demand in the European market offset the impact of the expiration of U.S. tax incentives and intensified competition in China.

The Austin, Texas-based company’s shares rose more than 3% in early trading. As of the close of the previous trading day, the stock had fallen more than 21% year-to-date.

These figures indicate that Tesla’s core automotive business, its largest source of revenue, may have stabilized following two consecutive years of sales declines, even as investors increasingly shift their focus from quarterly deliveries to CEO Elon Musk’s ambitions in artificial intelligence, robotaxis, and humanoid robots.

Although automotive sales remain Tesla’s largest source of income, its market capitalization of approximately $1.40 trillion relies heavily on these long-term goals.

Compared to Alphabet’s GOOGL.O Waymo, Tesla’s self-driving taxi service remains smaller in scale, while Waymo has already commercially launched in multiple U.S. cities.

According to aggregated data from Visible Alpha, Tesla delivered 486,532 vehicles from July to September, with the average analyst estimate at 456,896 units. The company needs to deliver at least 311,448 vehicles in the fourth quarter to avoid annual delivery declines for a third consecutive year.

“Strong delivery numbers set Tesla on track for annual growth after two years of declines. I believe FSD (Full Self-Driving) is the key differentiator that drives consumers to choose Tesla over other automakers,” said Morningstar analyst Seth Goldstein.

Demand appeared particularly robust at the start of the quarter, with CFO Vaibhav Taneja stating in July that Tesla “ended the second quarter with the largest order backlog since 2023 (link).”

Unlike earlier this year, analysts have raised their full-year forecasts—now expecting 1.82 million deliveries by 2026, up from the June consensus market forecast of 1.65 million.

After a decline in the European market last year—partly triggered by reactions to CEO Elon Musk’s political positions—EU auto registrations grew by approximately two thirds as of August. In France, the Model Y became the top-selling vehicle across all models, marking the first time a Tesla model has led the rankings.

In July and August, exports from Tesla’s Shanghai factory nearly doubled.

Analysts expect that as Tesla’s Full Self-Driving (FSD) software gradually rolls out across Europe—now approved in eight countries—sales will continue to rise.

Tesla’s driverless taxi service is now operating without in-car safety supervisors in Texas and Florida. Last month, the company added its custom-designed Cybercab model to its existing driverless taxi fleet in Austin.

The company produced 464,391 vehicles in the third quarter, below the expected 486,761 units.

(To facilitate non-native English speakers, Reuters provides automated translations of its reports into several other languages. As machine translations may contain errors or lack context, Reuters does not guarantee the accuracy of automated translations and provides them for reader convenience only. Reuters assumes no responsibility for any damages or losses resulting from the use of the automated translation feature.)