Tesla: Shares down despite record deliveries
We think the positive third-quarter numbers will be largely offset by a weak fourth quarter.
Key Morningstar metrics for Tesla
- Fair Value Estimate: $250.00
- Morningstar Rating: ★
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: Very High
Tesla reported 497,099 deliveries in the third quarter of 2025, a quarterly record for the company. Shares were down 2% at the time of writing on Oct. 2.
Why it matters: During the quarter, Tesla benefited from a US consumer rush to purchase an electric vehicle before the US EV tax credit expired on Sept. 30. We think this drove higher deliveries of Model 3 and Model Y vehicles, the firm’s more affordable autos.
- We attribute the share price decline to the outlook for Tesla’s fourth quarter and 2026 deliveries to be significantly affected by the tax credit expiration. Our full-year forecast for a little over 1.6 million deliveries implies Tesla will see a mid-teens percentage decline in the fourth quarter.
The bottom line: We are maintaining our $250 fair value estimate for narrow-moat Tesla. We think the positive third-quarter numbers will be largely offset by a weak fourth quarter. In 2026, we expect the launch of the cheaper Model Y will partially offset the tax credit expiration.
- At current prices, we view Tesla shares as materially overvalued, with the stock trading around 80% above our fair value estimate and in 1-star territory. We think the market’s current valuation focuses on a positive outlook for Tesla’s autonomous driving software versus auto sales.
- Yet, in our view, the autonomous driving software is still in the early testing phases, featuring a Tesla employee in every ride-hailing vehicle and Tesla operating in a geofenced area. This signals a longer testing window versus management’s guidance for robotaxis to be widespread next year.
