Tesla stock falls despite record deliveries and EV subsidy expiration.

Tesla shares dropped 5.11% to $436 despite reporting record Q3 deliveries of 497,099 vehicles. The surge in deliveries was driven by customers rushing to capture the $7,500 US EV tax credit before it expired. Investors are questioning whether demand can hold up without subsidy support. Attention will now focus on Tesla's Q4 delivery guidance and margin trends.

Tesla Inc. (NASDAQ:TSLA) shares fell by 5.11% to $436 on Thursday, September 12, 2025, despite reporting record third-quarter vehicle deliveries of 497,099 units Tesla Stock Falls Despite Record Q3 Deliveries Smash Wall Street Forecasts^[1]. The surge in deliveries was primarily driven by customers rushing to take advantage of the $7,500 US electric vehicle (EV) tax credit before it expired on September 30, 2025 Tesla Q3 Sales Hit Record Amid US EV Tax Credit Expiry, Faces Rising Competition^[2].

The quarterly performance marked a significant turnaround for Tesla after two consecutive quarterly declines earlier in 2025. The company delivered 497,099 vehicles during the period ended September 30, up from 462,890 deliveries in the same quarter of 2024 Tesla Stock Momentum Faces Valuation Test Despite Historic Q3 Performance^[3]. Production totaled 447,450 vehicles for the quarter, with the company manufacturing 435,826 of its popular Model 3 and Model Y vehicles.

Beyond autos, Tesla also set a record in energy storage, deploying 12.5 gigawatt-hours of products in the quarter, up significantly from 6.9 gigawatt-hours in the third quarter of 2024 Tesla Stock Falls Despite Record Q3 Deliveries Smash Wall Street Forecasts^[1]. This highlights the company's effort to expand its clean energy business alongside its core electric vehicle operations.

Investors are questioning whether the demand can hold up without the federal tax credit incentive. The expiration of the tax credit created urgency among potential EV buyers, particularly in the United States, where Tesla's deliveries surged. However, the company faces significant headwinds in the fourth quarter and beyond without the federal tax credit incentive.

Analysts warn that the surge in demand may be temporary, and a complete withdrawal or revision of the incentive regime could lead to lower demand in the coming months Tesla Q3 Sales Hit Record Amid US EV Tax Credit Expiry, Faces Rising Competition^[2]. Tesla's total sales for the first nine months of the year were down about 6% compared with the same period in 2024, despite the third-quarter uptick Tesla Q3 Sales Hit Record Amid US EV Tax Credit Expiry, Faces Rising Competition^[2].

Tesla's stock performance has been volatile, with shares jumping about 2% in early trading after the results were released and then falling by roughly 4% intraday Tesla Q3 Sales Hit Record Amid US EV Tax Credit Expiry, Faces Rising Competition^[2]. The company's automotive margins have compressed from 23% to 17.2%, raising questions about profitability as Tesla competes with lower-priced competitors like BYD's $10,000 vehicles Tesla Stock Momentum Faces Valuation Test Despite Historic Q3 Performance^[3].

Investors will be closely watching Tesla's October 22 earnings call for guidance on how the expiration of federal EV incentives will impact demand in future quarters. The company's valuation remains uncertain, with analyst price targets ranging widely from $115 to $600, with an average target of $345.50 Tesla Stock Momentum Faces Valuation Test Despite Historic Q3 Performance^[3].