Tesla has always been a very public company, one that never turned down an opportunity to show off its strengths. If it beats estimates, the company does it in an exaggerated manner, and if it does the opposite, the market reacts just as fast.
Fourth-quarter sales was not an exception as well. What was first considered as a silent open for Tesla stock, soon turned into a slight decline.
Tesla Not Delivering Q4 Forecasts
Tesla announced that the total number of vehicles sold in Q4 was 418,227 units instead of the company’s estimate of 422,850 and Bloomberg’s estimate of 440,907, falling short of both the company’s own consensus and the broader Bloomberg evaluations.
The difference with Tesla’s internal consensus was rather small, but the miss against the higher forecast of Bloomberg was more significant, which raises the issue of declines in sales‘ momentum at the year end. There was a slight rise in stock but the price decreased by about 1.6%, as the investors processed these figures.
The production figures turned out to be disappointing as well. The total manufacturing by Tesla for the quarter was 434,358 vehicles, which was a decline of 5.5% as compared to the same period last year, and it was not even close to the analysts’ forecast of nearly 471,000 units. On top of that, total sales were 16% lower than last year’s quarter, which is a clear reversal for a company that used to be the driving force behind the growth of the EV sector.
Signs of Exhaustion for Model 3 and Model Y
Tesla’s Model 3 and Y series still make up most of the sales, and these cars showed an extensive slowdown. The total delivered units were 406,585, which is a 14% year over year drop and a huge miss of the analysts’ forecast.
The manufacturing of the two models declined more gradually, dropping only 3.2% to 422,652 units, but even this small drop points more to a loss of interest from the customers rather than a shortage of supply.
The figures indicate that the issue for Tesla is more than a matter of getting more efficient in its production. Demand elasticity, pricing pressure, and increased competition, specifically in Europe and China, seem to be slowing down volumes even though Tesla is still the most talked about company in the EV market.
Europe has been a Weak Spot Everywhere
Data from different regions that was released on Friday morning had a mixed stance on Tesla’s global performance. Declines were reported in the primary European markets including Portugal, France, Sweden, and Spain, which finally concluded that Europe still remained a barrier to growth.
Norway was the only market that displayed a bright picture, but the gains were too small to compensate for the decline in the rest of the region.
Tesla’s uneven performance comes along with the competition getting tougher from the side of European and Chinese manufacturers as well as the changes in subsidy policies all over Europe.
The softness in Europe has increasingly become a recurring theme in Tesla’s quarterly reports and one that investors are watching closely in the lead up to 2026.
Wall Street’s Attention Moves from Cars to Code
Some analysts, even if the company’s numbers missed the target, leaned to a somewhat optimistic side. Dan Ives from Wedbush viewed the deliveries as “better than whisper numbers” framing the results as “better than feared” and a step in the right direction for Tesla’s story which is supposed to come in 2026.
This indicates that the market is already looking past the cars delivered and towards Tesla’s developing AI dreams. Ives affirmed his belief in the long-term that Tesla could monopolize the self-driving area, predicting that Tesla would be able to grasp about 70% of the world’s autonomous driving market in the next decade.
He believes that no one will be able to compete with Tesla on such a large scale with such vast data and AI technology. Ives said,
“Tesla will own ~70% of the global autonomous market over the next decade as no other company in the world can match the scale and scope of Tesla coupled with its broadening AI footprint”.
Other analysts were more cautious though. An analyst from Truist, William Stein, remarked that the number of cars delivered was less than expected, and called attention to the silence regarding the key plans, such as AI projects and new vehicle launches.
Stein pointed out that full self-driving and broader AI development are a lot more important to Tesla’s cash flow generation in the future, and not the quarterly delivery figures, which of course are less important. Although he lowered the short term earnings estimates, and slightly cut the price target, he kept the hold rating, which highlighted the market’s wait and watch stance.
“We assert investors should be more focused on AI projects, especially FSD. We view AI developments as far more important than auto deliveries for TSLA’s long-term cash generation and stock performance. Our near-term EPS estimates decline slightly, and PT goes to $439 (from $444). Hold.”
Bottom Line
The fourth-quarter delivery miss of Tesla is unlikely to disrupt the stock just by itself, but it does reveal a company that is undergoing changes. A slowdown of vehicle growth, continuous weakness in Europe, and increased competition are crashing together with the investors who are more concerned with AI, autonomy, and long-term optionality. For Tesla, the future does not deal so much with the number of cars it sells, but with the ability to sell the next chapter of the story convincingly.
The closer we get to 2026, the less the market’s patience may depend on factories, and more on algorithms.
