A mere handful of months ago, Tesla ((TSLA Quick QuoteTSLA - Free Report) ) shares looked doomed, and it felt as if the bears may have finally gotten their long-awaited moment. Tesla CEO Elon Musk made his foray into politics by spending more than a quarter of a billion dollars to support Donald Trump and the Republicans in 2024. Then, while already spread thin, he took a hiatus from Tesla and managed the ‘Department of Government Efficiency’ DOGE to help seek a solution to America’s soaring debt.

However, Musk would soon learn the reality of getting involved in politics in today’s toxic environment. Many democrats felt that Musk wielded too much power, leading to mass left-wing protests against Tesla, boycotts, and widespread vandalism. As if that weren’t bad enough, Musk had a ugly falling out with President Trump, leading to backlash from many partisans on the right. Meanwhile, Tesla’s legacy EV business was slowing, Alphabet’s ((GOOGL Quick QuoteGOOGL - Free Report) ) ‘Waymo’ seemed poised to dominate the robotaxi market, and even some of Musk’s staunchest followers began to lose faith in him, voicing concerns that he was no longer interested in running Tesla.

Tesla is on Pace for its Best September Performance Ever

However, if there’s one lesson Tesla has taught investors, it’s never to make a long-term bet against Elon Musk and Tesla, no matter how bad things may seem. Despite the slew of bearish headlines and negative earnings growth, TSLA is about to register its best September in history. Tesla shares up more than 30% in September and registered fresh all-time closing highs last week.

Image Source: Zacks Investment Research

Why are Tesla Shares Rising?

Tesla shares are rising for several reasons. The September rally was sparked when Elon Musk confirmed that he was done with politics. For investors, the news was a massive sigh of relief. The importance of Musk’s presence at Tesla was put on full display when he stepped away from Tesla to focus on his acquisition of social media platform Twitter, and TSLA shares dropped swiftly. In addition to Musk leaving politics, investors also cheered the Tesla board’s $1 trillion pay package proposal for Musk, seeing the offer as a way to keep Musk at Tesla and motivated.

Tesla shareholders are once again betting on the future. Tesla’s robotaxi service is finally live in Austin and San Francisco, with plans to expand into other cities like Miami and Chicago (pending regulatory approval). In addition, TSLA shares are rising on optimism surrounding its newest ‘Full Self Driving’ (FSD) update, which is slated to launch this week. Tesla FSD v14 will be launched to a limited number of social media influencers this week, with v14.2 set to follow in a few weeks. In a recent tweet, Musk hyped the debut, saying that “The car will feel like it is sentient being by 14.2.”

Tesla Q3 Delivery & Production Preview

Though Tesla is working to diversify its business with its energy segment and its upcoming ‘Optimus” humanoid robot, Tesla currently generates roughly three-quarters of its total revenue from its legacy EV business. Unfortunately for Tesla bulls, deliveries are 4% lower over the trailing twelve months, and over the past two years, growth has been sluggish at +1%. Tesla deliveries peaked in Q4 2023 and have been declining ever since.

Image Source: Zacks Investment Research

However, Tesla has a chance to change the narrative this week when it releases its third-quarter delivery and production numbers, which are expected to drop on Thursday before the US equity market opens. Below is a breakdown of Wall Street’s expectations for Tesla’s Q3 delivery numbers:

·       Q3 Delivery Expectations: Consensus Wall Street analyst expectations are for 448,000 units. (According to FactSet)

·       Delivery Comparison to 2024: Tesla delivered 462,890 vehicles in Q3 2024.

·       Q3 Production Expectations: UBS expects 470k vehicles produced in Q3 2025.

·       2025 Full-Year Delivery Outlook: Tesla delivered 336,681 vehicles in Q1 and 384,122 cars in Q2. Wall Street consensus estimates anticipate ~1.85 million vehicles will be delivered in full-year 2025.

The Q3 delivery and production numbers will be significantly different from those of previous quarters for several reasons, including tariff impacts, the expiration of the EV tax credit, and the release of the new Model Y.

Why Tesla Will Beat Q3 Wall Street Delivery Expectations

Though there are several crosscurrents heading into Thursday’s delivery number, there are several reasons for Tesla bulls to be optimistic, including:

1.       Tax Credit Expiration-Related Demand: Elon Musk has stated that he supports ending the $7,500 US federal EV tax credit, arguing that it would benefit Tesla and negatively impact its competitors. However, Musk later retracted his statement, arguing that it is unfair that President Trump’s ‘Big Beautiful Bill’ leaves oil and gas subsidies while sunsetting EV and solar incentives. Nevertheless, regardless of what Musk says, Q3 Tesla deliveries are likely to benefit dramatically from a ‘pull forward’ effect, as consumers likely have rushed over the past few months to take advantage of the $7,500 EV tax credit that won’t be available for the first time since the program started in 2009.

2.       Elon Musk’s Political Backlash Has Dissipated: While Tesla sales have undoubtedly suffered from Elon Musk’s political affiliations and controversial statements, his stepping back from politics and renewed focus on Tesla should help to alleviate these concerns. Although there are critics on both sides of the political aisle who will never buy a Tesla out of principle, Tesla remains the safest, most popular, and highest-quality EV on the market by far. In addition, Wall Street analysts are likely underestimating the loyalty of Tesla’s customer base. Tesla, which is famous for spending little to no money on marketing, may even benefit from loyalists buying Teslas simply to support Musk. Additionally, Elon Musk was recently seen shaking hands with President Trump at the Charlie Kirk memorial service, an act that may help repair his reputation in right wing political circles. In summary, time heals wounds, especially in the hyperactive modern-day news cycle of 2025.

3.       The Model Y Retool is Complete: Tesla’s Model Y SUV has been a smash hit. Since 2023, the Model Y has been the top-selling electric vehicle by far. Tesla recently begun selling a revamped and sleeker ‘Juniper’ Model Y, featuring exterior and interior aesthetic updates, new lighting, improved suspension, a front bumper camera, and enhancements to cabin comfort and noise levels. While the Model Y has mainly received positive customer reviews, anticipation and a wait-and-see mindset for Tesla’s tech-forward customers likely led to a lull in Model Y sales in early 2025. Additionally, Tesla underwent an intensive revamp of its factories in early 2025 to retool them for the new Model Y production. With these short-term barriers in the rearview mirror, the stage is set for an upside surprise on the Model Y front. Also, Tesla’s Cybertruck production is also gaining momentum and becoming more efficient.

4.       China’s Economic Rebound Should Boost Tesla Sales: China is Tesla’s second most important market, comprising ~22% of total revenue. Over the past few years, Tesla sales in China have suffered amid a floundering Chinese economy, plagued by high unemployment. However, following a slew of government stimulus measures and a relaxation of anti-business regulations, China’s economy is firing on all cylinders, registering robust GDP growth of 5% last year.  Meanwhile, following stringent lockdowns and government-driven fear surrounding COVID-19, Chinese households currently enjoy massive excess savings. With a still uncertain housing market, many of these Chinese households are likely to spend on EVs, which are wildly popular in China. If August is any clue for Tesla China’s sales, bulls are in business. Tesla sales jumped to 83,192 units in August, representing a healthy 22.6% rise versus July. The key will be how Tesla fares against tough Chinese competition, such as Nio ((NIO Quick QuoteNIO - Free Report) ), XPeng ((XPEV Quick QuoteXPEV - Free Report) ), and BYD Co. ((BYDDF Quick QuoteBYDDF - Free Report) ).

5.       Lower Interest Rates are a Positive for Tesla: Earlier this month, Fed Chair Jerome Powell delivered a long-awaited interest rate cut. Rate cuts not only stimulate the economy but also lower monthly costs for potential Tesla buyers, incentivizing purchases.

6.       Tariffs Help Tesla Fend Off Foreign Competition: Although Tesla experienced some initial negative impacts from President Trump’s unique tariff policy, overall, they are a net positive for the company. Tariffs increase the costs for foreign-made EVs, making Tesla’s US-manufactured EVs comparatively more attractive.

Betting Markets Suggest Big Tesla Delivery Beat

Betting markets are often more accurate than analysts because they benefit from ‘the wisdom of the crowd.’ Also, unlike polls, betting markets mean that betters are investing real money and have ‘skin in the game.’ Popular betting market Kalshi is currently pricing in Q3 Tesla deliveries of 505k, well above Wall Street consensus estimates.

Image Source: Kalshi

Tesla Technical View

Since its inception, TSLA have increased by a mind-blowing 34k%. That said, long-term charts indicate that TSLA stock performance comes in bunches. From 2014 to 2020, Tesla shares moved sideways as the company transitioned to new products. However, over the next two years, TSLA shares would multiply 17X! Currently, history appears to be repeating itself. Tesla shares have been stagnant since 2022 and are finally breaking out. As the old Wall Street adage goes, “The longer the base, the higher in space.” Should the breakout succeed, the Fibonacci extensions suggest that a reasonable price target for TSLA over the next few months is ~$600.

Image Source: Zacks Investment Research

Can Tesla deliveries be the breakout catalyst?

Why Investors Should Ignore Tesla’s Sky-High P/E Ratio

For value-oriented investors, Tesla’s price-to-earnings ratio of 207x makes the stock an automatic avoid.

Image Source: Zacks Investment Research

However, savvy investors understand that valuations require nuance. Investors are willing to place a higher valuation on Tesla because it is arguably the most innovative company in the world. Tesla is likely to be a leader in humanoid robots (which Musk sees as Tesla’s potentially largest future product) and artificial intelligence. In addition, Tesla is slated to release a more affordable version of its wildly popular Model Y SUV in Q4 2025. Finally, Tesla’s energy business is dramatically overlooked by Wall Street analysts. As the US power grid becomes increasingly strained by the insatiable electricity demand from AI data centers, utility companies are investing in Tesla’s Megapack to supplement the grid. Tesla Energy became profitable in mid-2022 and has produced profits in 13 consecutive quarters. Meanwhile, year-over-year energy deployments soared by 113% in 2024 alone. Energy is one of the most predictable trends on Wall Street, and Tesla is set to be a major beneficiary.

Bottom Line

After navigating a challenging period marked by political backlash, slowing EV growth, and market skepticism, Tesla shares are rebounding swiftly. Will this week’s delivery numbers be the catalyst that validates the market’s renewed optimism in Tesla?