Questions Remain Over Sustained EV Demand
Concerns Emerge Over "Excessive Expectations for Autonomous Driving"
Tesla's third-quarter deliveries unexpectedly increased, but its stock price plunged due to forecasts that the future growth of the electric vehicle market will slow down.
Tesla announced on October 2 (local time) that it delivered 497,099 vehicles in the third quarter of this year. This represents a 7% increase compared to the same period last year and also exceeded the expert forecast compiled by market research firm FactSet, which was 456,000 units.
This is attributed to consumers who had been hesitant to purchase electric vehicles rushing to buy before the U.S. federal government ended its electric vehicle tax credit at the end of last month. Tesla’s deliveries had declined in the first half of the year due to intensified global competition from Chinese electric vehicles and backlash from CEO Elon Musk’s political activities.
While third-quarter deliveries increased thanks to pulled-forward demand in the U.S., there are now concerns that electric vehicle demand will contract as tax incentives have disappeared starting this month. CEO Musk acknowledged during the second-quarter earnings call in July that Tesla could "face a tough few quarters" following the expiration of electric vehicle tax credits in September.
Another U.S. electric vehicle maker, Rivian, also reported third-quarter deliveries that exceeded market expectations on the same day, but revised its annual guidance downward to the lower end of its previously expected range. Stephanie Valdez Streaty, an executive at automotive market analysis firm Cox Automotive, also predicted that the electric vehicle market "will get tougher going forward," forecasting a slowdown in growth in the fourth quarter.
In addition to the elimination of electric vehicle tax credits, the Donald Trump administration relaxed existing fuel efficiency and emissions regulations, dealing a blow to Tesla's emissions credit trading business, which had contributed to its profits in recent years. Garrett Nelson, an analyst at market research firm CFRA Research, commented on Tesla’s business outlook, saying, "Although the (third-quarter) results were better than expected, it’s important to note that this data is backward-looking," and added, "There are still questions about how future legislative changes to emissions credit trading will affect profitability and whether electric vehicle demand will be sustained in the U.S. market without subsidies."
Market observers expect that if Tesla launches a new, more affordable model compared to its existing lineup, it could ease the price burden on consumers and boost sales. However, Tesla has not disclosed any specific information regarding the price or launch timing of its upcoming new model. Seth Goldstein, an analyst at Morningstar, said, "Currently, Tesla appears to be overvalued, as the market is focusing more on the positive outlook for autonomous driving software than on car sales," and added, "However, autonomous driving software is still in the early testing phase. Contrary to management’s guidance that robotaxis will be widely deployed by 2026, it may take more time."
On this day, Tesla shares ended a four-day rally and closed at $436.00 on the New York Stock Exchange, down 5.11% from the previous day, as pessimism about the company’s future business outlook emerged.
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