Tesla deliveries were down 2% in the September quarter vs the Street’s estimate of down 7%. This compared to Ford and GM being down 75% over the same period does not tell the whole story.

The 2% y/y decline needs to be taken into context. Last year, deliveries benefited from the U.S. EV tax credit sunset, which was effectively a one-time event. I believe this resulted in an additional 40-50k Teslas sold in the U.S. a year ago. Removing 45k units from last year’s delivery number implies on an apples-to-apples basis that deliveries in Sep-26 would have been up 8%. While that 8% represents a deceleration from the 25% in the Jun-26 quarter, it’s a measurable improvement from CY24 and CY25 when deliveries were down 1% and 9%, respectively. In other words, this is the first time since CY23 where deliveries grew in three consecutive quarters y/y.

The skeptics would attribute the improvement to high gas prices related to the Iran war. While this undoubtedly had a positive impact, it doesn’t explain the fact that EV sales for GM and Ford were down about 40% in June and 70% in September, which underscores something is working at Tesla.

While gas prices will affect EV growth rates for everybody, the underlying trend is notable: Tesla is beginning to regain market share in the U.S.

Traditional auto is in a tough spot. We knew this day would come for a long time as Tesla poured money into making a more compelling EV for the right price and advancing FSD.

The only problem is that the progress was masked by the fact that consumers didn’t want EVs from 2024 to the start of 2026. The Iran war, with its high gas prices, pushed buyers back to EVs and revealed an uncomfortable reality for traditional carmakers. They’re in trouble.

Before I go too far down this road, I want to recognize that once gas prices fall, demand for EVs will also fall in the near term. I believe long-term EV growth will outpace ICE growth given they’re a better way to get around. Objectively, they’re cheaper to operate, you don’t have to hassle with the gas station, and they’re cleaner. When it comes to EVs, Tesla has the most compelling lineup for the dollar, outside of Chinese EV makers. That means that traditional car companies have to price their cars higher or price them comparably and lose money. It’s the Catch-22 that I have talked about for two years.

The even more ominous challenge for traditional carmakers is that there’s a new factor emerging in the EV buying decision: autonomy. For those buyers, which is a small group today, who see how good FSD is, the decision is easier to go with a Tesla. Over time, more people will have FSD and tell their friends, and those friends will buy Teslas. Given that traditional auto does not have a viable answer to autonomy outside of licensing FSD, that means the road ahead will become increasingly difficult for them. That outcome may take a decade to play out, but the writing is on the wall.

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