Tesla just posted its sharpest delivery drop on record. But investors largely shrugged, betting on the company's long-term AI and robotaxi potential
David Paul Morris/Bloomberg via Getty Images
Tesla $TSLA’s second-quarter delivery numbers are in, and they’re not exactly pretty. The company sold 384,122 vehicles globally in the second quarter, a nearly 14% drop from the same period last year and the company’s steepest year-over-year decline on record. This is also the second straight quarter of falling deliveries — and is confirmation (if any was still needed) that Tesla’s core automotive business is losing torque.
But in somewhat classic Tesla fashion, the worse the fundamentals look, the better the stock seems to behave. Shares jumped as much as 6% in premarket trading Tuesday, as Wall Street digested the miss with a shrug and doubled down on what has become the company’s favorite diversion: robotaxis.
Tesla was expected to deliver between 385,000 and 390,000 cars in the quarter, according to Bloomberg’s consensus estimate. Some forecasts were even more bearish. That Tesla ultimately landed in the mid-380s wasn’t a win, but it wasn’t exactly a disaster, either.
“Apparently [we] cut too much,” William Blair’s Jed Dorsheimer wrote in a Wednesday note. “We expect the stock to react positively as investors feared worse.” RBC, in a note, highlighted the impact of “affordable new models coming in Q3” that could provide a tailwind in the second half of the year, especially if the Model Y refresh continues to deliver.
Wedbush’s Dan Ives echoed the optimistic tone, saying results were “roughly in line” with expectations and “better than feared,” crediting the Model Y’s refresh cycle with reviving global sales momentum and pointing to Tesla’s rebound in China (sales rose in the country for the first time in eight months) as a potential turning point. “Deliveries in the region are starting to slowly turn a corner,” he wrote, calling China “the heart and lungs of the TSLA growth story.”
The drop in deliveries wasn’t isolated to one region or model — it was the result of multiple overlapping headwinds. One of the more immediate factors was the lingering impact of factory upgrades that Tesla blamed for part of its first-quarter slump. But the real tension might lie beyond the factory floor. CEO Elon Musk’s political entanglements — his role in the Trump administration, combined with feuds with the president himself — haven’t exactly helped Tesla’s reputation at home or abroad.
“We only see downside from [Musk’s political distractions],” William Blair’s Dorsheimer wrote, “and would prefer effort to be channeled towards the robotaxi rollout at this critical juncture.” Wedbush’s Ives said, “Musk needs to focus on driving Tesla and not putting his political views first.” In markets where Tesla once held an almost aspirational status, consumer backlash and political pushback have weighed heavily on demand.
In China, overall EV sales were down about 18% year-over-year through May, and the country’s domestic brands continue to gain ground. In Europe, Tesla’s registrations remain a sore spot; through May, the company’s market share has fallen from 1.6% to just 0.9%. Even the U.S. — historically Tesla’s most stable market — showed signs of fatigue earlier in the quarter before a modest recovery helped stabilize the decline.
Tesla produced 410,244 vehicles during the quarter, meaning the company built more than 26,000 cars that it simply didn’t sell — the third consecutive quarter with production outpacing deliveries. But the market, it seems, is no longer trading on Tesla’s delivery numbers — or even on its EV business at all. It’s trading on belief.
Specifically: belief in a driverless future. Tesla’s recent robotaxi demo rides in Austin, Texas — a tightly choreographed rollout of Full Self-Driving (FSD) Mode using Model Ys — have reignited a familiar narrative: that Tesla isn’t a car company with an autonomy side hustle, but a soon-to-be autonomy company that just happens to sell cars. The demos weren’t flawless, but the message was received loud and clear: Tesla’s next act is coming. And on Wall Street, that’s enough — at least for now.
“Momentum in the shares will follow [robotaxis] closely,” William Blair’s Dorsheimer wrote. “We encourage investors to be tactical on pullbacks as Tesla executes its transition from low-margin automaker to high-margin AI and autonomous driving tech.”
Tesla’s valuation reflects this shift. William Blair recently estimated that Tesla’s robotaxi business alone could be worth $299 a share — nearly 10 times the value of its legacy auto unit. Wedbush has made similar arguments, suggesting Tesla’s cost advantage in autonomy could make it a category killer over time.
Ives, for one, is all in. “Autonomous remains the biggest transformation to the auto industry in modern day history,” he wrote on Wednesday, predicting Tesla will not only “own the autonomous market in the U.S.” but eventually license its FSD technology globally. He sees 90% of Tesla’s future valuation tied to autonomy and robotics, not EV sales.
That’s the story Wall Street wants to hear. But it’s also a story doing a lot of heavy lifting.
Not every part of Tesla's business is struggling. The company deployed 9.6 GWh of energy storage in the quarter — below William Blair’s 12.5 GWh forecast and the first quarter’s 10.4 GWh figure. Still, both RBC and William Blair dismissed the miss as routine “lumpiness” tied to long project timelines, not fading demand. Crucially, the Senate left Tesla’s energy storage subsidies untouched in President Donald Trump’s massive tax bill, preserving tax credits through 2033. That’s a major win for the Megapack, which William Blair estimates accounts for 90% of Tesla’s energy business revenue. The only dampers on that front may be tariffs on Chinese battery materials and continued uncertainty around solar-linked projects.
But beyond energy, Tesla’s outlook remains uncertain.
There’s still no sign of the Model Q, a $25,000 “mass-market” vehicle that is widely seen as a crucial growth driver, which didn’t materialize in June as expected. Its absence leaves a hole in Tesla’s product roadmap that likely won’t be filled until late this year at the earliest. Without it, any meaningful recovery in unit sales will be hard to come by. Tesla has also teased an affordability-focused autonomous vehicle, the “Cybercab,” but details remain sparse. Meanwhile, investors are still waiting for momentum from the Cybertruck, for a refreshed Model S/X $TWTR, and for a broader robotaxi rollout.
Tesla’s second-quarter miss may have been better than feared, but it still underscores a harsh reality: The company’s core auto business is cooling fast. But for now, none of that seems to matter to the market — not when there’s a shinier story to tell (or sell).
Investors seem willing to overlook today’s declining deliveries for tomorrow’s hypothetical robotic army. With robotaxis, FSD, and Musk’s grand vision of autonomy on the horizon, investors are betting that Tesla’s real growth engine hasn’t even started yet. But the company’s margin for error is narrowing. With two consecutive quarters of falling sales, a ballooning inventory, and an increasingly skeptical market, the company can’t coast on goodwill and future-looking bets forever.
At some point, the cars — or the robots — have to show up.
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