The electric-car maker kicked off 2026 with a disappointing update on vehicle deliveries. But is demand about to pick back up?
Tesla (TSLA 2.62%) reported its fourth-quarter 2025 vehicle deliveries this morning, and the headline number moved in the wrong direction. While a drop in vehicle deliveries was expected, it’s still disappointing in the broader context of the growth stock’s exceptionally high valuation. For a company whose shares are priced for extreme growth, a down quarter is never comfortable.
Of course, deliveries are only part of the story for the electric vehicle company. Investors won’t see fourth-quarter revenue and profit until Tesla publishes its full quarterly update on Jan. 28. In the meantime, however, this is the freshest data Tesla investors have — and it’s not looking good.
Here’s a closer look at Tesla’s latest delivery numbers, and why this sales slump may not last.
Tesla Cybercab. Image source: Tesla.
The magnitude of the drop
Tesla delivered 418,227 vehicles in the fourth quarter, down 15.6% from 495,570 in the same quarter of 2024.
Deliveries are disappointing on an annual basis as well. The company finished 2025 with about 1.64 million deliveries, an 8.6% decline from 2024’s 1.79 million.
Perhaps even more concerning, Tesla’s fourth-quarter production slipped both sequentially and year over year. During Q4, Tesla produced 434,358 vehicles, down from 459,445 a year earlier and 447,450 in Q3.
Production also exceeded deliveries by about 16,000 vehicles in the quarter. But this gap may be because the company is trying to normalize inventory levels after delivering significantly more vehicles than it produced in Q3.
What’s going on with Tesla’s deliveries?
The recent rhythm has been choppy. Tesla’s Q2 deliveries were down 13.5% year over year. Then third-quarter deliveries rose 7.4%. Finally, fourth-quarter deliveries then fell both year over year and sequentially.
The main cause of this recent sales volatility was a combination of generally weaker demand for autos and the timing of the expiration of the Federal U.S. clean-vehicle tax credit. Expiring after Sept. 30, 2025, there was an incentive for buyers to pull purchases forward into the third quarter. This is why lower fourth-quarter deliveries were expected.
Of course, Tesla’s delivery release did include one bright spot. The company’s energy storage deployments reached 14.2 gigawatt-hours (GWh) in the fourth quarter, surpassing the prior record of 12.5 GWh set in the third quarter. Full-year storage deployments were 46.7 GWh, up from 31.4 GWh in 2024.
While this is a smaller part of Tesla’s overall business, it has been growing as a percent of its operations over time. So, it’s good to see continued rapid growth in this nascent yet important segment.
The bigger story
While it would obviously be better to see vehicle sales rising than declining, Tesla investors seem to be focusing more on factors beyond short-term sales trends these days. Given the stock’s market capitalization of nearly $1.5 trillion as of this writing and the stock’s price-to-earnings ratio of more than 300, investors are betting on major catalysts to both add a new revenue stream for the company and accelerate demand for its vehicles.
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The catalysts? The advent of self-driving capabilities and Robotaxi, Tesla’s autonomous ride-sharing service. Unlike Uber‘s ride-sharing app, Tesla’s is built around its own fleet of vehicles. The company believes that future software updates will eventually make all of the vehicles it sells capable of driving themselves and of being deployed into Tesla’s Robotaxi operation.
In addition to Robotaxi providing a future revenue stream for the company, Tesla thinks it will lead to an influx in demand for its vehicles. Indeed, in the company’s most recent earnings call, Tesla CEO Elon Musk said he is planning to increase production as fast as possible because he is confident that the realization of full self-driving capabilities in its cars will lead to increased demand.
With all of this in mind, investors will be watching Tesla’s fourth-quarter update closely later this month to see if Musk thinks these catalysts will finally arrive this year. Without the full realization of self-driving technology and the scaling of Robotaxi from a pilot program to a fully commercialized ride-sharing business, investors may start focusing more on Tesla’s underwhelming near-term sales, and the stock could slide.
