Tesla Stock Suffers Worst Drop In Over 2 Months Despite Record Q3 Deliveries — What’s Fueling The Selloff?

Tesla shares dropped sharply on Thursday despite the electric vehicle (EV) maker delivering 497,099 vehicles in the September quarter, a 7.4% year-over-year increase and well above the consensus estimate of 443,000. 

Shares of Tesla fell 5.1% to $436 on Thursday, marking its worst session in more than two months, before edging up 0.8% in after-hours trading.

The results reflected a surge in U.S. demand on the back of the Sept. 30 expiration of the $7,500 federal EV purchase tax credit under President Donald Trump’s tax-and-spending bill.

The strong quarter followed a 33% rally in Tesla’s shares during September, prompting a “sell-the-news” reaction from investors who viewed the delivery jump as a one-time pull-forward rather than a sustainable growth trend.

Analysts See Tax Credit Pull-Forward Driving Surge

Gene Munster, managing partner at Deepwater Asset Management, said most of Tesla’s third-quarter strength stemmed from a 35% quarter-on-quarter jump in U.S. sales triggered by the ending EV tax credit. He noted that while the surge was mainly due to that pull-forward, “investors should largely throw out the positive number,” adding that “the future will be autonomy.”

Munster said Tesla’s ability to put more cars on the road profitably improves its long-term position in autonomous driving. He projected December-quarter deliveries could fall 5%–10% year over year due to post-credit demand weakness but expects growth to rebound in 2026–2027 as Tesla ramps up its lower-priced vehicle and self-driving programs.

Future Fund Managing Partner Gary Black also said that the market’s reaction was expected. “Investors aren’t irrational — the 3Q beat was largely pull-forward from 4Q as consumers bought in front of the expiring EV credit,” he wrote on X. “Few analysts will revise Tesla FY’25 delivery estimates higher; most will just take the 3Q beat out of their 4Q estimates.”

Brokerages Highlight Short-Term Boost, Long-Term Promise

RBC Capital said Tesla’s third-quarter deliveries were even better than it anticipated. The firm, which has an ‘Outperform’ rating and a $325 price target, said the U.S. tax credit expiration contributed to the gains, while softening performance from Chinese EV makers also played a role.

Morgan Stanley called Tesla’s results “strong,” saying the 497,000 deliveries came in at the high end of the buy-side range of 450,000–500,000. The brokerage said the beat marked Tesla’s first year-over-year increase in deliveries this year and likely reflected a demand pull-forward before the credit’s expiry. It maintained an ‘Overweight’ rating and a $410 price target.

Wedbush Securities reaffirmed its ‘Outperform’ rating and $600 price target, calling the quarter a “massive bounceback.” Analysts Daniel Ives and Scott Devitt said Tesla’s AI and robotics roadmap could unlock a $2 trillion–$3 trillion valuation between 2026 and 2027. 

On Stocktwits, retail sentiment for Tesla was ‘neutral’ amid ‘high’ message volume.

One bullish user predicted that Tesla’s steep drop could pave the way for a strong rebound in the sessions ahead.

Another bearish user argued that Tesla’s strong September deliveries would soon give way to a slowdown, adding that attention would likely shift to the self-driving hype and claims about the Optimus robot. The user predicted that Elon Musk could sell shares and that the recent rally was a cult-driven uptrend, unlikely to hold as the stock trends lower.

Tesla’s stock has risen 8% so far in 2025.

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