Tesla's delivery update is on deck. Why investors shouldn't abandon an 'unwavering belief' in EVs.

By William Gavin

Investors have become less interested in Tesla's car business lately, but some analysts see that as shortsighted

In early 2025, Tesla's electric-vehicle business was rocked by Elon Musk's outspoken politics and role in President Donald Trump's administration.

A rocky U.S. market for electric vehicles could mean muted sales growth when Tesla reports its delivery figures.

On Thursday, Tesla (TSLA) is expected to publish its delivery update for the first quarter. Analysts are expecting that some 381,000 vehicles were sent to customers in the period, according to the consensus of Wall Street estimates tracked by FactSet. While meeting that expectation would mark a roughly 9% decline from the December quarter, Tesla would show 13% year-over-year growth.

Tesla sold only 336,681 cars during the first quarter of 2025, marking its weakest delivery performance since mid-2022. At the time, Tesla was revamping its factories to make new Model Y SUVs, a key driver of sales.

The company was also struggling to manage the fallout from CEO Elon Musk's role leading the U.S. Department of Government Efficiency. A Yale University working paper later found that without what it labeled the "Musk effect," Tesla's sales would have been substantially higher.

Tesla's potential sales growth is somewhat stymied by weakness in the U.S. market after key EV tax credits were scrapped last year. Several carmakers have cut their EV investments. One of them, General Motors (GM), on Wednesday reported that EV sales were down nearly 19% in the first quarter, relative to a year before.

Meanwhile, Tesla's sales rebounded in February in Europe after a monthslong slump. Electric-vehicle demand in China remains high and Tesla rebounded in the major market in January and February.

Just how important the delivery report is for Tesla's stock price is debatable, since investors have focused attention on more ambitious goals. Those include a joint Terafab chip-making project, autonomous robotaxi services and humanoid robots that could eventually be useful both on factory floors and in the kitchen.

Read: 'Do you believe in Elon?': Musk tests Tesla investors' faith with an expensive chip-making plan

Tesla, too, has its eyes set firmly on autonomy. Besides a long-awaited sports car, Tesla will "really" only make autonomous vehicles over the long run, Musk said in January. The Model S and Model X luxury cars are also being discontinued after the June quarter to redirect production capacity to Optimus robots.

However, Tesla just delayed a demonstration of its next-generation robots, and the robotaxi service is still in the early stages. The company's plan for the Terafab was only revealed last month. None of these three big investor obsessions is having a meaningful positive impact on Tesla's financials.

Some analysts have argued that shareholders shouldn't forget the importance of electric vehicles. They pointed out that the vast majority of Tesla's revenue comes from the EV business, even as other parts of the business, like energy, show significant growth.

"Sure, Tesla's story has evolved. The headlines are focused on robo-this and tera-that - but we maintain an unwavering belief in the inevitable transition to electric transport," Canaccord Genuity's George Gianarikas said in a note to clients on Monday. "The true mobility revolution isn't just about who drives - it's about what powers the journey."

Gianarikas rates Tesla's stock at buy but lowered his price target to $420 from $520 in the latest report. He forecast deliveries of about 370,000 units for the March quarter.

Tesla stock rose 2.6% on Wednesday after Musk's SpaceX reportedly filed confidential paperwork for an initial public offering. Shares are down about 15% so far this year.

In addition to reporting deliveries, Tesla will give an update on its energy business. It's expected to report storage deployments 38% higher than a year before, as demand remains elevated.

See: Tesla and Google team up to push their own fix for rising electricity bills

-William Gavin

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04-01-26 1900ET