Tesla Sales Outlook Darkens Despite Musk’s Self-Driving Euphoria

Tesla Inc. finished the past year on a high as investors increasingly embraced Elon Musk’s enthusiasm for autonomous vehicles. Winning over actual car buyers was another story.

Shares of the world’s most valuable car company rose in the second half, largely as the CEO touted advances in artificial intelligence and robotics. But the progress Musk declared didn’t translate into success in showrooms; Despite record deliveries in the third quarter, the company likely sold fewer vehicles in the last six months than it did a year ago.

Tesla on Friday is expected to report that it delivered about 440,900 vehicles in the fourth quarter, down 11% from a year earlier, according to data compiled by Bloomberg. This week, Tesla took the unusual step of issuing its own even more pessimistic average analyst forecast, calling for a 15% decline.

Wall Street has become similarly pessimistic about the outlook for 2026. This time two years ago, analysts predicted that Tesla would deliver more than 3 million vehicles. The average estimate for this year’s deliveries has fallen to roughly 1.8 million.

“Tesla investors are focusing on what the company might look like five, 10, 15 years from now and really discounting what they see in the near term,” CFRA Research stock analyst Garrett Nelson said by phone. “The question is, can they maintain that, especially as we think financial headwinds are going to become more pronounced?”

Even by the standards of Musk and Tesla (two names synonymous with turbulence), 2025 was a turbulent year.

The automaker’s vehicle sales are off to a dismal start, in part because the company is rearranging production lines at all its auto plants for the redesigned Model Y, its most popular vehicle. Another important factor was the intense backlash against the CEO’s work for US President Donald Trump.

Tesla’s shares had lost 45% of their value for the year by early April, when Musk publicly fought with members of management over tariff policy.

Musk has spurred the recovery by stepping back from the government and returning to work on a long-standing goal: launching a ride-hailing business with cars he says will eventually be autonomous.

In June, Tesla launched an invitation-only Robotaxi service in Austin, with security operators to inspect each of the Model Ys ferrying Musk fans through the Texas capital. While the vehicles violated traffic laws from day one, they caught the attention of federal regulators, who launched multiple investigations into the company’s driving systems, but investors shrugged off safety concerns.

Tesla’s board later proposed a new compensation package for Musk in September; That package offered a payout worth potentially $1 trillion based on milestones, including millions of robotaxi deliveries. Shortly thereafter, the return was completed; Tesla shares have been trading higher throughout the year.

By the time the stock closed at an all-time high on Dec. 16, the company had added more than $915 billion in market value in just over eight months.

But while Tesla’s robotaxi prospects have fascinated investors, car buyers have been relatively cautious.

Musk acknowledged the difficulties in persuading consumers to buy what Tesla markets as Full Self-Driving, or FSD, a suite of features that still require human control. Allegations that Tesla misled Californians by exaggerating the autonomous driving capabilities of its vehicles could lead the state to suspend the company’s sales license for 30 days earlier this year.

Tesla’s attempt to differentiate itself with driver assistance functions in China’s crowded electric vehicle market isn’t working either; BYD Co. and Xiaomi Corp. Companies such as offer similar systems as standard features.

Largely due to BYD’s much higher sales in China and increased momentum in Europe, where Tesla has failed to gain regulatory approval for FSD, analysts expect the Shenzhen-based automaker to sell more battery electric vehicles worldwide for the fifth consecutive quarter.

After a widely anticipated annual sales decline (its second in a row), Tesla has more hurdles to contend with in 2026. The US has stopped offering federal tax credits for EV purchases and leases, and Musk warned this could lead to “a few rough patches.”

Some see a positive development in the withdrawal of US policy support, which is causing major manufacturers to pull back from electric vehicle investments. Ford Motor Co. last month it said it expected to record about $19.5 billion in charges related to abandoning EV and battery projects that were doomed to lose money.

Musk finished the year building anticipation for the Cybercab, a two-seat compact car with butterfly doors. Although the prototype it first unveiled in late 2024 does not include a steering wheel or pedals, the company will sell the car with those components if regulators request it, Robyn Denholm, Tesla’s executive chairman, told Bloomberg News in October.

“Investors have fully embraced his autonomous vision, and that comes at a good time, because Tesla’s EV business will likely remain flat at 5 percent next year,” said Gene Munster, managing partner at Deepwater Asset Management. “At this point, Elon just needs the auto business to stabilize next year to satisfy investors.”

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