The bad news is Tesla’s March quarter deliveries came in below expectations. The company’s published consensus implied roughly 8% y/y growth, and some late whisper estimates were closer to 10%. That means the reported growth of 6.3% y/y is a miss, which explains the stock’s decline of 4% on the news when the Nasdaq was down.

The more important read is that this was one of the first clean quarters to judge underlying demand without the benefit of the U.S. tax credit. That credit had effectively lowered the price of Model 3 and Model Y by about 10% for roughly 30% of global Tesla buyers (I estimate 40% of sales are in the U.S., and 30% of total sales had qualified for the credit). Keep in mind that for a long time, a core part of the Tesla bear case was that the company could not sustain delivery growth without government support.

Part of the reason deliveries are increasing is that Tesla introduced lower-priced versions of the Model 3 and Model Y right after the credit expired, helping offset some of the lost affordability. My sense is those stripped-down versions have not been especially successful. Even so, the key point remains: Tesla returned to growth in a quarter where investors were looking for evidence that demand would falter without the subsidy.

Looking ahead, the delivery trajectory is improving. After the March quarter’s 6.3% y/y growth, June is likely to land in a similar range—roughly 5% to 7% y/y (against a Street estimate of 7%). The September quarter will be the exception, as the comparison is difficult given the prior pull-forward tied to the expiration of the tax credit.

Investors likely won’t read too much into a weak September print. If anything, the September delivery number is a win-win given the ample noise expected in the quarter. By December, expectations move back to double-digit growth, and the setup into next year improves further.

Consensus today reflects that same outlook. Deliveries were down about 9% last year, are expected to grow about 5% this year, and around 10% in calendar 2027 (based on FactSet estimates).

The March quarter production number—up 12% y/y to 408k looks encouraging at first glance, but statistical production is becoming less of a leading indicator for future deliveries. Over the 2019–2021 timeframe, production and next-quarter deliveries showed a strong relationship. More recently, between 2022 and 2025, that relationship has broken down enough that production no longer offers reliable forecasting value for the out-quarter. I’m putting more weight on incentives, gas prices, and the macro than on production. Based on those factors, I expect June to come in around 5–7% growth, compared to the Street at 7%.

Deliveries still matter, despite investors’ focus on autonomy. The reason is that every vehicle delivered expands the installed base that can later be monetized through FSD. The work Tesla is doing to build and distribute EVs remains foundational to its Robotaxi and autonomy ambitions.

That strategic importance is heightened by what competitors are doing. Over the past two years, Ford, GM, Stellantis, Toyota, and Honda have stepped back from EV investment by about 30%. That means Tesla is better positioned when autonomy ultimately takes off, because autonomy will be built on top of an electric fleet rather than ICE. This means deliveries are an integral part of the Tesla physical AI thesis.

Tesla’s energy storage business had a disappointing quarter on the surface. Deployments came in at 8.8 GWh, down 38% from the record 14.2 GWh in December and well below the 14.4 GWh consensus. It was also down 15% y/y, which stands out because this has been one of the company’s strongest growth businesses over the past two years.

That said, the miss looks more like a timing issue than a demand issue. Large Megapack projects do not land in a straight line. They depend on customer construction schedules, utility approvals, and grid connections, which can shift deployments from one quarter to the next. In that context, a weak quarter does not say much about the health of the underlying business.

The longer-term trend still looks strong. Over the past eight quarters, Tesla’s storage deployments have gone through a ramp, with y/y growth of 157% in June of 2024, 73% in Sep 2024, 244% in Dec of 2024, and 156% in March of 2025. Growth then slowed to 2% in June 2025, picked back up to 81% in Sep 2025 and 29% in Dec 2025, before turning negative this quarter. Bottom line this is a lumpy and growing business. Currently the energy storage business is about 13% of sales, and will increase as a percentage of sales over time.

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