Electric vehicle giant Tesla Inc. may face challenges in replicating its record-breaking third quarter, marked by strong customer demand. According to Gene Munster of Deepwater Asset Management, Tesla’s fourth-quarter deliveries could be weaker than consensus estimates.
Q4 Deliveries On Deck
Tesla is expected to report its fourth-quarter deliveries this week. Analysts believe that deliveries may not be the primary focus for investors going forward. Munster predicts that Tesla will report around 415,000 deliveries in the fourth quarter, which is a 16% decrease from the previous year and below the consensus estimate of 449,000.
Key Points to Consider
- Tesla reported record deliveries of 497,099 in the third quarter, driven by the expiration of the U.S. federal tax credit on September 30.
- Munster’s estimate takes into account the impact of the tax credit expiration, which is expected to result in a larger-than-expected drop in deliveries.
- Despite the potential decline in deliveries, Tesla may gain market share in the fourth quarter, with U.S. electric vehicle sales expected to decrease by 30% year-over-year.
Focus on AI Business
Munster believes that investors will increasingly focus on Tesla’s AI and robotaxi segments rather than deliveries. He notes that Tesla’s shares have outperformed the Nasdaq over the last six months, driven by investor optimism about the company’s physical AI capabilities.
Investor Expectations
- Munster expects investor expectations for Tesla’s deliveries to decline, with a greater emphasis on the company’s AI business.
- He predicts that Tesla’s market capitalization, currently at $1.6 trillion, could reflect a sum-of-the-parts premium relative to the automotive business alone.
- Munster estimates that Tesla’s deliveries will be flat to up 5% year-over-year in 2026, below the Street consensus estimate of 13% growth.
Conclusion
While Tesla’s Q4 deliveries may be weaker than expected, the company’s AI business is expected to drive growth and investor interest. As the electric vehicle market continues to evolve, Tesla’s ability to stabilize its deliveries and leverage its AI capabilities will be crucial to its success. With a potential market capitalization of $4 trillion, Tesla’s future prospects look promising, driven by its leadership in physical AI.