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Will Tesla See a Second Consecutive Year of Delivery Decline?
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Key Takeaways
TSLA Q2 deliveries fall 13.4% year over year to 384,122, missing Wall Street forecasts.
Production issues are no longer a factor; rising inventories now point to a growing demand shortfall.
An aging lineup, stronger rivals and Musk's polarizing image are weighing on Tesla's global sales.
Tesla (TSLA - Free Report) is facing a growing concern that can no longer be brushed aside — weakening deliveries. After its first-ever annual delivery decline in 2024, 2025 started on a rough note. Sales have fallen across key markets, with Europe leading the downturn. Deliveries in Q1 fell 13% year over year. In Q2, deliveries fell another 13.4% to 384,122 vehicles.
In absolute terms, Q2 sales were only slightly better than Q1— Tesla’s worst quarter for deliveries in over two years — but fell short of both Wall Street expectations of 390,000 units as well as our forecast of 420,000 units.
What makes the weak second-quarter deliveries harder to defend is the absence of any production issues. Tesla CEO Elon Musk had attributed Q1 delivery softness to factory shutdowns for the new Model Y ramp-up. However, with production now back online across plants and inventories rising sharply, it has become evident that this is a demand problem, not a supply one.
This Isn’t an Industry-Wide EV Slowdown
It should be noted that Tesla’s struggle isn’t reflective of the broader EV market — other players are growing just fine.
General Motors (GM - Free Report) delivered 46,280 EVs in Q2, more than double its sales from the year-ago period. Last year, General Motors sold roughly 114,000 EVs in the United States, surpassing the 100,000 mark for the first time. The momentum has continued in 2025. In the first half of this year, General Motors sold 78,000 EVs and now claims a 13% share of the U.S. EV market.
China’s BYD Co Ltd (BYDDY - Free Report) continues to challenge Tesla. In the fourth quarter of 2023, BYD briefly took the EV sales crown from Tesla before ending the full year just behind. The same pattern was repeated in 2024. In Q1’25, BYD delivered over 416,000 BEVs, outpacing Tesla’s 336,000. In Q2, BYD reported 606,993 BEVs sold (up 42.5% year over year), marking its third straight quarter of beating Tesla in battery EV sales.
Other competitors like Volkswagen in Europe and Xiaomi in China are also gaining momentum, compounding pressure on Tesla’s global market share. Clearly, EV demand is still growing but Tesla sales are falling.
Tesla is now producing far more vehicles than it’s selling. Inventories, already elevated at the start of the year, rose by 50,000-60,000 vehicles in the first half of 2025. This further underscores the disconnect between supply and demand.
What’s Causing Tesla’s Delivery Decline?
An Aging Model Lineup: Tesla hasn’t introduced a truly fresh mainstream vehicle in years. While the company continues to roll out minor refreshes, they haven’t been enough to spark renewed demand. The one new product, the Cybertruck, hasn’t caught on widely — its design is polarizing, and its appeal remains niche.
Stronger, Smarter Competition: Tesla is no longer the only game in town. Competitors are launching EVs with more advanced features, better designs and aggressive pricing. Even legacy automakers are stepping up their EV game. Tesla’s premium price point and limited product variety are starting to hurt, especially as rivals offer more choices with competitive specs and compelling designs.
The Musk Factor: Musk’s polarizing persona is now part of the brand. Customers are increasingly getting put off by his political commentary and erratic behavior online. With more choices available, consumers who might have previously considered Tesla are now looking elsewhere.
Can Tesla Avoid Another Down Year?
Tesla now faces a real chance of delivering fewer vehicles in 2025 than it did in 2024. That would mark a second straight year of declining sales, despite once aiming for 50% annual growth.
Musk already walked back the company’s 2025 vehicle growth target from 20–30% to more modest expectations on the fourth-quarter earnings call. But on the Q1 call, he didn’t even reaffirm those lowered targets. The company says it will revisit its guidance in the Q2 earnings update, but the outlook is clearly getting cloudier.
Unless something changes drastically in the second half of 2025 — a surprise new model, major price adjustments, or demand recovery in key markets — Tesla is on track for a second consecutive year of delivery declines.
The Zacks Rundown on Tesla
Shares of Tesla have risen around 28% over the past year against the industry’s decline of 5.6%.
Image Source: Zacks Investment Research
From a valuation standpoint, TSLA trades at a forward price-to-sales ratio of 9.64, way above the industry.
Image Source: Zacks Investment Research
See how the Zacks Consensus Estimate for TSLA’s earnings has been revised over the past 60 days.
Image Source: Zacks Investment Research
Tesla stock currently carries a Zacks Rank #5 (Strong Sell).
Image: Shutterstock
Will Tesla See a Second Consecutive Year of Delivery Decline?
Key Takeaways
Tesla (TSLA - Free Report) is facing a growing concern that can no longer be brushed aside — weakening deliveries. After its first-ever annual delivery decline in 2024, 2025 started on a rough note. Sales have fallen across key markets, with Europe leading the downturn. Deliveries in Q1 fell 13% year over year. In Q2, deliveries fell another 13.4% to 384,122 vehicles.
In absolute terms, Q2 sales were only slightly better than Q1— Tesla’s worst quarter for deliveries in over two years — but fell short of both Wall Street expectations of 390,000 units as well as our forecast of 420,000 units.
What makes the weak second-quarter deliveries harder to defend is the absence of any production issues. Tesla CEO Elon Musk had attributed Q1 delivery softness to factory shutdowns for the new Model Y ramp-up. However, with production now back online across plants and inventories rising sharply, it has become evident that this is a demand problem, not a supply one.
This Isn’t an Industry-Wide EV Slowdown
It should be noted that Tesla’s struggle isn’t reflective of the broader EV market — other players are growing just fine.
General Motors (GM - Free Report) delivered 46,280 EVs in Q2, more than double its sales from the year-ago period. Last year, General Motors sold roughly 114,000 EVs in the United States, surpassing the 100,000 mark for the first time. The momentum has continued in 2025. In the first half of this year, General Motors sold 78,000 EVs and now claims a 13% share of the U.S. EV market.
China’s BYD Co Ltd (BYDDY - Free Report) continues to challenge Tesla. In the fourth quarter of 2023, BYD briefly took the EV sales crown from Tesla before ending the full year just behind. The same pattern was repeated in 2024. In Q1’25, BYD delivered over 416,000 BEVs, outpacing Tesla’s 336,000. In Q2, BYD reported 606,993 BEVs sold (up 42.5% year over year), marking its third straight quarter of beating Tesla in battery EV sales.
Other competitors like Volkswagen in Europe and Xiaomi in China are also gaining momentum, compounding pressure on Tesla’s global market share. Clearly, EV demand is still growing but Tesla sales are falling.
Tesla is now producing far more vehicles than it’s selling. Inventories, already elevated at the start of the year, rose by 50,000-60,000 vehicles in the first half of 2025. This further underscores the disconnect between supply and demand.
What’s Causing Tesla’s Delivery Decline?
An Aging Model Lineup: Tesla hasn’t introduced a truly fresh mainstream vehicle in years. While the company continues to roll out minor refreshes, they haven’t been enough to spark renewed demand. The one new product, the Cybertruck, hasn’t caught on widely — its design is polarizing, and its appeal remains niche.
Stronger, Smarter Competition: Tesla is no longer the only game in town. Competitors are launching EVs with more advanced features, better designs and aggressive pricing. Even legacy automakers are stepping up their EV game. Tesla’s premium price point and limited product variety are starting to hurt, especially as rivals offer more choices with competitive specs and compelling designs.
The Musk Factor: Musk’s polarizing persona is now part of the brand. Customers are increasingly getting put off by his political commentary and erratic behavior online. With more choices available, consumers who might have previously considered Tesla are now looking elsewhere.
Can Tesla Avoid Another Down Year?
Tesla now faces a real chance of delivering fewer vehicles in 2025 than it did in 2024. That would mark a second straight year of declining sales, despite once aiming for 50% annual growth.
Musk already walked back the company’s 2025 vehicle growth target from 20–30% to more modest expectations on the fourth-quarter earnings call. But on the Q1 call, he didn’t even reaffirm those lowered targets. The company says it will revisit its guidance in the Q2 earnings update, but the outlook is clearly getting cloudier.
Unless something changes drastically in the second half of 2025 — a surprise new model, major price adjustments, or demand recovery in key markets — Tesla is on track for a second consecutive year of delivery declines.
The Zacks Rundown on Tesla
Shares of Tesla have risen around 28% over the past year against the industry’s decline of 5.6%.
From a valuation standpoint, TSLA trades at a forward price-to-sales ratio of 9.64, way above the industry.
See how the Zacks Consensus Estimate for TSLA’s earnings has been revised over the past 60 days.
Tesla stock currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here