Tesla Faces Q4 Delivery Reality Check as EV Incentives Fade

Tesla’s delivery figures have been displayed like suspenseful quarters for analysts, which makes the analysts refresh their spreadsheets and investors reload stock charts. Nevertheless, the current situation might not be as dramatic as others.

The delivery estimates for the last quarter are coming in and stock analysts think that Tesla is going to miss the average forecast, not because the demand has disappeared, but because the government incentives have almost vanished.

Analysts See Deliveries Below Consensus

It is expected from Tesla that it will deliver less cars in the last quarter than the market is expecting. The New Street Research estimates the deliveries to be in the range between 415,000 and 435,000 vehicles, which is less than the roughly 440,000 units forecasted by the consensus.

UBS agrees to this, with analyst Joseph Spak expecting about 415,000 deliveries, which is about 5% lower than Visible Alpha expectations. The reduction is said to be a result of a transition from an extraordinarily strong third quarter, which was mainly due to the incentives that were about to expire.

The Post-Subsidy Aftermath in the U.S

Tesla’s fourth-quarter weakness seems to be mainly in the U.S. The New Street Research analyst Pierre Ferragu, refers to “pull-forwards” from the third quarter, where demand was high as customers wanted to secure subsidies before they were about to expire and were no longer available at the end of September.

Therefore, U.S deliveries are predicted to drop significantly, with Ferragu anticipating a quarter-on-quarter decline of approximately 75,000 vehicles. UBS is even more pessimistic, claiming that after the $7,500 EV tax credit has expired, U.S sales could fall more than 35% sequentially and approximately 25% year-on-year.

Annual Pressure Persists

The delivery in Europe is likely to be improved quarter-on-quarter along with the seasonal trends. UBS has pointed out that the sales in the eight biggest countries of Europe have increased about 31% in the first two months of the quarter.

However, the place is still going to have a yearly decline with a total of quarterly deliveries of about 70,000 units, which is approximately 15% less than the figures of the last year.

Spak wrote,

“We expect Europe is improved q/q. Through the first 2 months of the quarter, deliveries in Europe’s top 8 markets are up ~31% q/q. We expect the region to end around ~70k deliveries for the quarter. This would likely be down ~15% y/y”. 

China Is Strong but Not Immune

China will probably grow a little bit sequentially due to December’s typical year-end strength. Still, UBS warns that the deliveries could drop by 10% as compared to last year.

This means that even though China is the main area that brings stability to Tesla, it might not be able to provide the fast growth that defeats the softness in other regions.

Back to Normal Globally After a Strong Q3

The third quarter performance in international markets was very strong, and now analysts think that the momentum is going to soften. New Street Research sees a quarter-on-quarter decline in South Korea and Turkey due to the boost in demand from the previous tax benefits.

UBS also emphasized the declining deliveries in these markets, saying it is mainly due to the incentives expiration, but the overall volumes will likely be higher than last year as Tesla grows its presence worldwide.

Pressure on Margins

The reduction in delivery volumes will probably impact Tesla’s profitability negatively. Ferragu anticipates a 2.3 percentage point decrease in gross margin quarter-on-quarter, which will place the margins about 2.2 points lower than the consensus estimates currently.

This illustrates how much Tesla’s margins are still susceptible to changes in volume, specifically when price increases or other selling incentives are withdrawn.

Are Deliveries Still the Main Story?

In spite of the delivery headwinds, some financial analysts still are not sure if the quarterly volume numbers are the main reason to investor’s sentiments. UBS’s Spak mentions that the market may be looking for narratives that are long-term, and such narratives would include Tesla’s self-driving cars, robo-taxis, and Tesla’s Optimus humanoid robot.

Thus, weaker deliveries may be perceived as a minor issue that could be resolved shortly, and not as a critical factor that defines Tesla’s future.

Bottom Line

While the discounts are disappearing and the volumes are going back to normal, the company specifically in the U.S, will have to compete with a tougher comparison. The bigger question for the investors may be not how many cars Tesla sold this quarter, but whether its next growth phase will be occupied by vehicles on the road or robots and autonomy that are still under development. Tesla is scheduled to announce its fourth-quarter delivery figures on 2^nd January 2026, the date may bring clarity to everyone.