Tesla's Q3 Sales Surge Despite Industry Challenges

Tesla experienced an increase in global deliveries in the third quarter, thanks to attractive financing and leasing deals. The company delivered 462,890 vehicles, surpassing analyst expectations. However, shares dropped due to ongoing challenges in selling older models. The announcement of third-quarter earnings on October 23 is expected to reveal the impact of these challenges.

Low interest financing, sweet lease deals, price cuts and free charging boosted Tesla's global deliveries in the third quarter, marking the first increase this year for the electric vehicle maker.

The Austin, Texas-based company announced on Wednesday that it delivered 462,890 vehicles from July through September, supported by loans as low as 1.99 percent and $299 monthly leases on the Model 3, its least expensive vehicle. This represents a growth from the 435,059 vehicles delivered during the same period last year.

Despite surpassing analyst estimates of 462,000 for the period, Tesla's shares dropped sharply before the opening bell, trading down more than 4 percent. The company has faced persistent struggles to sell its aging model lineup amidst slowed growth in electric vehicle sales in the US and Europe, driven by concerns over range, price, and charging capabilities.

Early year sales declines led to significant discounts, impacting Tesla's industry-leading profit margins. Analysts estimated the average vehicle sales price was $42,500 for the third quarter, the lowest in four years. This sales dip is anticipated to affect third-quarter earnings, scheduled to be announced on October 23.

Competition from both legacy and startup automakers is putting additional pressure on Tesla's market share. Most of Tesla's sales came from the smaller and less-expensive Models 3 and Y, with only 22,915 units sold of the more expensive Models X, S, and the new Cybertruck.

Wedbush analyst Dan Ives noted that third-quarter sales would likely rebound due to increasing demand in China and stabilized pricing. However, BNP Paribas Exane cautioned that long-term market expectations for Tesla remain high, predicting that sales estimates for 2026 and 2027 will be 10 to 15 percent below market consensus. Tesla is set to unveil a purpose-built robotaxi at an event next week.

(With inputs from agencies.)