Elon Musk at the White House in March.
Getty Images
Tesla’s third-quarter electric vehicle sales notched a company record, blowing past analyst expectations, as U.S. buyers rushed to get cars before a federal tax credit expired and CEO Elon Musk, who’d harmed the brand with his DOGE role for the Trump Administration, lowered his government profile. But the spike in deliveries looks like to be short lived, as the company remains on track for another annual decline.
Austin-based Tesla reported delivering 497,099 electric vehicles during the quarter that ended on Sept. 30, up 7.4% from a year earlier and its first such increase this year. The results were far above analyst expectations of, at best, 480,000 units for the period and came despite declines in China, its biggest market, and Europe. The company was well-positioned for a big increase as it had substantial inventory of unsold models coming into the quarter, as production in the year’s first half exceeded deliveries by more than 50,000.
“Tesla has also kind of come away from Elon being a central government figure, which I think helped”
“It wasn’t necessarily surprising to see just how strong U.S. sales were because of the expiration of the tax credit and they had the inventory available,” said Jessica Caldwell, executive analyst for industry researcher Edmunds. “Tesla has also kind of come away from Elon being a central government figure, which I think helped because when we looked at consideration for the brand earlier in the year and people shopping other brands, it didn’t necessarily paint the rosiest picture. It seemed like it was taking a bit of a toll on Tesla’s consideration.
Tesla was far from the only automaker to post a sales surge driven by the end of the $7,500 federal credit, with GM, Ford, Hyundai and other brands all reporting big gains in September for electric models. Its sales rise comes as Musk, whose net worth now tops $500 billion, encourages investors to see Tesla as an AI and robotics company, though EVs, batteries and EV charging services account for nearly all its revenue. It could be a major player in robotaxis and selling “Optimus” humanoid robots someday, but its excessive valuation–with a share price that’s currently about 253 times the company’s estimated earnings–is powered mainly by the faith many investors place in Musk’s claims, rather than concrete results.
For the latest in cleantech and sustainability news, sign up here for our Current Climate newsletter.
“Excitement around the markets for robotaxi and Optimus have jumped ahead of the [near-term] weakness in the minds of investors,” Ben Kallo, an equity analyst for Baird, said in a research note. As result, even though he expects an annual sales drop this year and “choppy” near-term fundamentals–such as worse profit margins for auto and battery sales owing to tariffs imposed by the Trump administration, Kallo anticipates Tesla’s shares will keep rising.
That wasn’t the case on Thursday, however. Tesla, which jumped in pre-market trading on Thursday, fell 5.1% to $436 in Nasdaq trading.
Tesla’s sales gain was driven almost entirely by the U.S. market as China, its biggest region, likely saw an 8% drop in the quarter from a year ago and European sales were down 20%. And despite its overall quarterly sales strength, Tesla’s EV deliveries are still down about 6% this year through September. Kallo estimates it will deliver 1.67 million vehicles in 2025, down about 7% from 2024.
The company’s biggest sales drops came in the first and second quarters, when Musk was an active member of President Trump’s administration, aggressively firing federal workers and slashing federal humanitarian programs like USAID. And though he initially boasted he’d slash up to $2 trillion of federal spending, it’s unclear whether he saved even a fraction of the $180 billion of savings claimed when he stepped down from his DOGE role in May.
Demonstrators protest against Elon Musk outside of the Tesla Diner in Los Angeles on Sept. 26.
AFP via Getty Images
Those actions, along with his high-profile support for far-right causes and politicians, spurred protests and vandalism at Tesla stores across the U.S. and Europe. And though he briefly feuded with Trump after leaving the administration, he’s shown signs of trying to rebuild better relations again, notably with his friendly encounter at a memorial service for Charlie Kirk in September.
Musk continues to make controversial comments on X, the social media platform he owns, but his absence from daily national news coverage seems to have helped Tesla.
“Consumers have short-term memories and Musk’s separation from Trump and being less of a jerk–at least as far as what has been making or not making headlines–has meant that a lot more people felt okay buying or leasing a Tesla,” said Loren McDonald, CEO and chief analyst at Chargeonomics, an EV and EV charging data firm.