Tesla shipments plummet 13% - its worst quarterly drop ever. Why is the stock rising?

Tesla shares jumped 5% in July 2 trading after the automaker reported the worst quatal decline in deliveries in its history, wrote Barron's. The fall was stronger than the Wall Street consensus forecast, but still not as sharp as the most pessimistic analysts had feared. At the same time, Tesla's share price is now determined not so much by electric car sales as by the prospects of a full-fledged launch of its fleet of unmanned cabs, noted Yahoo Finance.

Electric car maker Tesla delivered 384,100 vehicles in the second quarter, down 13% from a year earlier. The most pessimistic analysts had expected the company to report a 20% drop, but sales fell short of the consensus forecast: it expected Tesla to deliver 394,400 vehicles in the second quarter, according to Visible Alpha data cited by Reuters.

The automaker's securities strengthened 5% after the publication, but are still worth 22% less than they were at the beginning of the year. 

«The market is reacting to the fact that supply wasn't as bad as analysts had feared, especially since several investment banks downgraded their forecasts last week at once,» explained the reaction in an interview with Reuters, Morningstar senior equity analyst Seth Goldstine. 

«We're at rock bottom,» was nevertheless how the company s results commented on Bloomberg TV, Deepwater Asset Management managing partner Gene Munster.    

The data on deliveries go against the May statements of Tesla CEO Ilon Musk: he assured that the car business has recovered from the recession at the beginning of the year, notes Bloomberg. At the same time, by the end of the year, he may be under even greater pressure if the tax bill proposed by President Trump is passed, which, among other things, provides for the abolition of incentives for the purchase of electric cars, the agency predicts.

«We believe this will increase [investors'] doubts about reputational damage to the brand and create risks of [lowering] our expectations and consensus forecast for the full year,» Baird analyst Ben Kallo wrote in an investor note. He now has a «neutral» rating on Tesla shares.

Tesla was counting on a revamped version of its Model Y crossover to support its quarterly results, and it bore some fruit, writes Tipranks. However, the company's electric cars are increasingly losing appeal against the offerings of rivals such as China's BYD and Xiaomi, whose share is growing in both the Chinese and European markets. At the same time, General Motors is building up its position in the electric car segment in the United States, Bloomberg notes.

Tesla assured investors in April that it would begin assembling new, more affordable vehicles in the first half of the year. «There is still no word on an affordable model, and we believe this is the one that is critical to restoring volume growth,» the Baird analyst points out.

Most on Wall Street expect Tesla to post its second consecutive annualized decline in deliveries - after a 1.1% drop in 2024. For that not to happen, the company would need to sell more than a million vehicles in the second half of the year, which would be a record for it, wrote Reuters. On average, experts surveyed by Bloomberg predict Tesla will deliver about 1.66 million electric cars in 2025, down 7.3% from 2024. 

If Musk continues to lead the company and personally participate in decision-making, Tesla will be on an accelerated growth trajectory in the coming years, with deliveries expanding in the second half of 2025 thanks to the updated Model Y, accounts Wedbush analyst Dan Ives, one of the most consistent bulls on Ilon Musk's company. Despite Tesla's serious weakening in China in previous quarters, it recorded an increase in demand for the Model Y in June. This, according to Wedbush, reflects increased demand for the Model Y and signals a reversal in delivery momentum in the key market. This, Wedbush said, reflects the company's increased demand for the Model Y and signals a turnaround in supply dynamics in the key market. 

Investors' bets on Tesla now rest not just on electric car sales, but also on Ilon Musk's ambitious promises about the future of unmanned cabs, reports Yahoo Finance. Toward the end of the quarter, Musk shifted investor attention from its core business to the launch of this long-promised service. Although Tesla only let test robotaxi rides to a limited number of fans in a small area of Austin, and videos from the test drives caught the attention of federal safety regulators, the company's stock rose 23% in that three-month period, Bloomberg writes.

On Tuesday, the U.S. Senate approved President Donald Trump's bill to eliminate tax credits for Americans to buy electric cars starting Sept. 30. If the House of Representatives approves the document in its current form, it could result in a $1.2 billion drop in Tesla's annual profit, according to Yahoo Finance.

The Energy Innovation think tank estimates that eliminating the subsidies would reduce electric vehicle sales by about 100,000 units a year by 2035, and certain provisions of the bill could also hurt the business of Tesla's Energy division, which makes energy storage devices. 

Until recently, investors viewed Musk and Trump's friendship as a factor favoring robotaxi development and the Tesla CEO's broader business interests. Now, however, Musk is publicly criticizing Trump's bill: in the latest social media skirmish, the president threatened to cancel other subsidies that benefit Musk's companies, including Tesla and aerospace and defense company SpaceX.

Morgan Stanley, in a June note to investors, pointed to the standoff between the two former allies as a possible problem for the company's sales. «While the situation remains uncertain, we believe this conflict is unlikely to help demand for Tesla vehicles, and instead could temporarily alienate buyers from both political spectrums at once,» according to the report, which according to the Wall Street Journal.

This article was AI-translated and verified by a human editor