Tesla

Tesla’s June-quarter earnings have more moving parts than usual. The bottom line is the long term growth story is intact, with the negative wild card around how the Street thinks about greater capex. New topics this quarter include expectations around capex, where I expect management to guide higher for next year, and gaining better visibility into whether the surge in June deliveries is sustainable. The traditional focus areas still matter. 1. automotive gross margins excluding regulatory credits, which I expect to come in above the Street’s 18.5% consensus. 2. updates to robotaxi rollout. Tesla has added three cities in July, and I expect management to indicate another three cities before year-end, broadly in line with Street expectations. 3. I expect the Cybercab production ramp to shift from late 2026 into the first half of 2027.

Tesla shares traded down 6% (Nasdaq down 0.5%) despite a massive June-quarter delivery beat. That reaction looks strange on the surface, given Tesla delivered 480k vehicles, up 25% y/y, compared to the official Street number of 406k, which implied 6% growth. My take is that the selloff comes down to three things: 1) buy on the rumor, sell on the news after strong third-party data that suggested deliveries were up 20%, pushing the stock up 13% over the past five trading days vs. Nasdaq up 4%; 2) investors are questioning how much high gas prices helped this quarter; and 3) investors believe part of the strength was the one-time ending of a DOGE headwind after Elon left in May 2025. Even backing out those one-time benefits, this was still a monster number, likely up 20%-plus compared to 6% in March. The bigger point is simple: the EV winter that started in March 2024 is ending, which means CY27 growth will likely be faster than expectations.

We expect Tesla to deliver 420k vehicles, ahead of the 406k consensus but below the high end of estimates at roughly 460k. If Tesla hits our estimate, we believe shares will respond favorably. In other words, the company does not need to reach the highest expectations for this to be viewed as a positive outcome. At 420k deliveries, y/y growth would be 9%, up from 6% in the Mar-26 quarter and the highest growth rate Tesla has reported since Dec-23. The bottom line is the underlying growth is improving after last year's sunsetting of the EV tax credit.

Tesla’s March quarter was better than the stock’s post-call reaction suggests, with shares essentially flat in after-hours trading. Profitability came in well ahead of expectations, and delivery commentary for the rest of the year pointed to growth in line with the Street. However, the headline was the Capex guide for 2026, which came in 25% higher than what they said last quarter. My take is that this level of increase in Capex is a good thing, putting more space between Tesla and its competitors, though at this point, I'm not sure who those competitors even are.

Tesla’s March quarter delivery report slightly missed the estimates, up 6.3% y/y vs. the Street at up 8% and the whisper of up 10%. The more important takeaway is that deliveries still grew 6% y/y in the first quarter, which offers a cleaner read on demand without the benefit of the U.S. tax credit that ended last September and added noise in the December report. March deliveries reinforce the view that Tesla's auto business is stabilizing, which remains strategically important to the broader autonomy story. Separately, the big miss in Energy and Storage (about 13% of the business), was a timing issue.

The bottom line: If Model 3 & Y deliveries come in at 324k or better (vs. the Street at 351k), it is a win for TSLA shares. It would demonstrate stability (flat y/y) in the first clear read on underlying demand following the expiration of U.S. EV credits. Taking a step back, while investor focus has shifted — with Robotaxi, FSD, and Optimus progress now central to the investment thesis — deliveries still matter. For the headline number, the Street is expecting 366k (up 8.5% y/y), compared to a 16% decrease in Dec-25 and a 7% increase in Sep-25. I am expecting 345k (up 2%). The key metric will be Model 3/Y deliveries, as S/X are being phased out. The Street is expecting 351k (up 8%), while I am expecting 330k (up 2%).

Tesla’s quarter was met with shares up 2% in after hours, follwing shares being down 0.5% over the past week, suggesting investors were modestly impressed by the company’s progress in autonomy. I believe the stock action understates the progress the company is making in physical AI, and expect a breakthrough in FSD in the next one to two years, which should have a domino effect of accelerating progress in Robotaxi. My evidence of this progress includes recent personal observations of FSD, the company now reporting FSD subscriptions, and the company discontinuing Model S and X, about 2% of sales, in favor of using production lines to ramp Cybercab.

Tesla will report December earnings on Wednesday, January 28th. Since reporting deliveries on January 2nd, shares of TSLA are up 1%, in line with the Nasdaq. The three most important topics on the call are the timing of expanding safety-driver-free Robotaxi service to new cities, high-level commentary on deliveries in 2026, the first full year without the tax credit, and margin expectations this year, including the impact of the lower-priced Model 3 and Model Y. While FSD, Optimus, and timing of Cybercab ramp are top of mind, there is likely little new Elon will say to change how investors are gauging the success of those segments. In the end, I expect shares to move higher throughout the year as investors gain confidence that Tesla remains best positioned to capitalize on physical AI.

Tesla delivered 418k vehicles versus Street expectations of 420k and above the whisper number of 415k. Overall, deliveries were down 16% year over year in December, compared with up 7% in September. Cutting through the noise around the timing of the tax credit expiration, I believe deliveries would have been down ~5% in both September and December signaling stabilization that should allow investors to remain focused on autonomy. Additionally, I believe these results indicate the first U.S. EV market share gains in a couple of years.

We expect December deliveries, which will likely be reported on Friday, January 2, to come in at 415k versus the Street at 449k. This would imply deliveries are down 16% y/y, compared with the Street’s expectation of a 10% decline. The difference reflects our model’s adjustment for the expiration of the tax credit in September, which assumes year-over-year growth in September and December will be consistent at down 5%. Ultimately, investors are likely to look past any December-quarter delivery miss, as the results should suggest the auto business is beginning to stabilize.

A lot happened in 2025 when it comes to robotaxis, which makes it fitting to mark where things stand today between Waymo and Tesla. This year, Waymo moved beyond the pilot phase and entered the scaling phase, with a fully driverless service operating in five US cities and a fleet of around 2.5k vehicles. Tesla’s Robotaxi is running a fleet of around 50 vehicles, largely supervised in Austin and the Bay Area. While Waymo has the lead, the market remains nascent, likely exiting 2026 with about 1% of rides in the US, which means Tesla has plenty of time to catch up. For 2026, it will all come down to how the no safety driver Austin test goes. If that goes well, look out Waymo.

The shareholder meeting was a good day for Elon. Investors overwhelmingly approved his $1T pay package with more than 75% in favor. That's a win for TSLA investors for two reasons. First, it gives Elon the control and financial carrot he wanted, which means he will stay engaged at Tesla. Second, the high level of support likely means investors will continue to look past near-term challenges and stay the course with hope for the long term. Elon made it clear that the long term is anchored in the success of Optimus. Separately, during Musk's presentation and Q&A, he floated the idea of building a fab, an outcome I put in the unlikely category over the next five years.