Tesla Q4 Deliveries Miss as Annual Sales Fall Again
Tesla delivered roughly 416,000 vehicles in Q4, below estimates, marking a second consecutive year of declining deliveries. Shares still rose 1%.
Tesla confirmed what the pre-announced numbers suggested: 2025 was another down year for vehicle sales.
The company reported fourth-quarter deliveries of approximately 416,000 vehicles on Friday morning, missing Wall Street's estimate of 426,000. Production came in around 433,000 units. Both figures were down from Q4 2024, when Tesla delivered 495,570 vehicles and produced 459,445.
Full-year deliveries totaled roughly 1.64 million—down from 1.79 million in 2024 and marking a second consecutive annual decline. Yet shares rose 1% on the news.
The Numbers
Q4 2025 deliveries fell 16% year-over-year. Production dropped 5.5%. Neither figure surprised investors who had been watching Tesla's self-reported delivery consensus, released days earlier on its investor relations page.
The miss is smaller than some feared. Tesla's own compiled analyst estimates pointed to 422,850 deliveries for the quarter. Coming in slightly above that internal target provided relief, even if the StreetAccount consensus of 426,000 wasn't met.
For the full year, 1.64 million deliveries represents an 8% decline from 2024. That's the second straight year of falling sales—a remarkable turn for a company that defined EV growth just a few years ago.
Why It Happened
Two factors drove the weakness.
First, President Trump's decision to end the federal EV tax credit by September 30, 2025 pulled demand forward into Q3. Consumers rushed to buy before the incentive expired, leaving Q4 with softer organic demand.
Second, competition intensified. BYD has taken the global EV lead, with European registrations for the Chinese automaker up 240% through November while Tesla's fell 39% over the same period. Model fatigue is real—the Model 3 and Model Y are aging, and refreshes haven't reignited the growth Tesla enjoyed earlier.
Why Shares Rose
The stock gained despite the miss because the narrative has shifted.
Tesla trades on autonomous driving potential, not car sales. The Cybercab robotaxi, Full Self-Driving improvements, and the sub-$25,000 model expected in 2026 are what bulls are buying. Vehicles delivered in Q4 2025 matter less than the roadmap for 2026 and beyond.
Management guided to 1.75 million deliveries in 2026—a return to growth after two down years. Investors chose to focus on the forward outlook rather than the backward-looking miss.
There's also the January effect. Tesla's short interest remains elevated, and the first trading day of the year can see positioning unwinds that favor the stock.
Valuation Question
Tesla's market cap hovers near $1.5 trillion, implying a forward P/E above 200. That's tech-company multiples for a carmaker delivering 1.6 million vehicles annually.
The valuation only makes sense if the autonomous thesis plays out. A robotaxi network generating recurring revenue at software margins would justify the premium. Vehicles alone, especially declining vehicles, do not.
Bulls point to regulatory momentum under the Trump administration, which has signaled support for self-driving deployment. The Cybercab is expected to reach volume production by Q2 2026, with some analysts modeling meaningful revenue contribution by year-end.
Bears note that Tesla has promised autonomous breakthroughs before. FSD has been "coming soon" for years. Until robotaxis generate actual revenue, the valuation rests on faith.
What Options Say
Tesla remains one of the most actively traded options underlyings on the Street.
As we covered in the year-end options analysis, traders have been aggressively positioned for upside, with call volume consistently outpacing puts. That dynamic held through the delivery report.
The put/call ratio stayed low after Friday's release. Traders aren't betting against Tesla despite the fundamental weakness—a reminder that momentum and sentiment can override fundamentals for extended periods.
What Comes Next
Earnings are the next catalyst. Tesla reports Q4 results later this month, with focus shifting to margins, FSD progress, and 2026 guidance.
The 1.75 million delivery target for 2026 needs to stick. Any walk-back would undermine the return-to-growth narrative that's supporting the stock.
Beyond that, execution on Cybercab matters. Production timelines, regulatory approvals, and early performance data will determine whether the autonomous thesis remains intact or gets another reality check.
Friday's delivery miss was expected and priced in. Tesla's 2026 hinges on what comes next, not what happened last quarter.