Tesla (TSLA) Stock: Two Years of Delivery Declines Raise Competitive Concerns

TLDR

• Tesla’s 2025 deliveries totaled 1.64 million vehicles, falling 8.6% year-over-year in the company’s second consecutive annual decline
• China’s BYD delivered over 2.2 million EVs in 2025, surpassing Tesla to become the world’s largest EV manufacturer
• Q4 deliveries dropped 16% to 418,227 units, coming in below both HSBC and consensus estimates
• The expiration of U.S. tax credits and increased competition in Europe and China pressured sales across all major markets
• HSBC reaffirmed its Sell rating with a $131 price target following the disappointing delivery report

Tesla reported full-year deliveries of 1.64 million electric vehicles for 2025. The figure represents an 8.6% decrease from 2024 levels.

This marks back-to-back years of falling deliveries for the automaker. The pattern represents a shift from Tesla’s historical growth trajectory.

China’s BYD shipped more than 2.2 million EVs during the same period. The Chinese manufacturer now holds the title of world’s largest EV producer by volume.

Tesla, Inc., TSLA

The fourth quarter proved especially difficult. Tesla delivered 418,227 vehicles between October and December, down 16% compared to Q4 2024.

HSBC analyst Michael Tyndall had projected higher numbers. The actual deliveries came in 5.2% below his forecast and 1.1% under the consensus estimate.

The disappearance of the $7,500 federal EV tax credit likely hurt U.S. sales. Tesla’s budget-friendly Standard models couldn’t offset the impact of losing this buyer incentive.

Demand issues weren’t confined to America. Data from Europe and China reveals weakness across Tesla’s most important international markets.

Competition Intensifies Across Key Regions

The global EV landscape is fragmenting along geographic lines. Tyndall described the market as increasingly regionalized.

American consumers are slowing their EV adoption rate. Meanwhile, European and Chinese markets face their own unique pressures.

European buyers have more choices than ever before. Local automakers and international brands are eating into Tesla’s market share on the continent.

HSBC expects this trend to continue. The firm predicts Tesla will keep losing ground to competitors in European markets.

China presents a different challenge. The government is working to calm aggressive price competition while extending subsidies for vehicle trade-ins.

These policies should support overall EV demand in China. However, they don’t guarantee Tesla will capture a larger slice of sales.

Tesla built approximately 434,000 vehicles during Q4. That’s roughly 16,000 more units than the company actually delivered to customers.

Inventory Builds as Production Outpaces Sales

The gap between production and deliveries tells an interesting story. Tesla appears to be betting on stronger demand in the first quarter of 2026.

Tyndall expressed skepticism about this assumption. He couldn’t identify clear catalysts that would drive the anticipated rebound in sales.

Building inventory ahead of uncertain demand carries risks. If buyers don’t materialize, Tesla could face pressure to discount vehicles or slow production.

The energy storage business delivered better news. Tesla deployed 14.2 GWh of energy storage products in Q4.

This exceeded HSBC’s projection by 7.5%. The energy division remains much smaller than automotive but continues growing.

Shares dropped 2.6% after the delivery numbers went public. Investors digested the weak performance across Tesla’s core business.

HSBC stuck with its bearish stance. The firm maintained its Sell rating and $131 price target on the shares.

Wall Street Remains Split on Future Prospects

Analyst opinions vary widely on Tesla’s outlook. The stock holds a Hold consensus rating from Wall Street research firms.

That rating breaks down to 13 Buy recommendations, 10 Hold ratings, and eight Sell calls. The division reflects uncertainty about the company’s direction.

The average analyst price target sits at $395.89. This implies about 10% downside risk from current trading levels.

Optimistic analysts point to technologies beyond traditional car sales. Full self-driving software, robotaxi plans, and the Optimus robot represent future revenue streams.

Pessimistic analysts focus on what’s happening right now. Declining deliveries and mounting competition in the core automotive business concern them.

The valuation debate continues. Some investors believe Tesla deserves premium pricing for its technology pipeline while others see an overvalued car company.

Tesla’s Q4 energy storage deployment reached 14.2 GWh, beating HSBC’s estimates by 7.5% and providing one of the few positive data points in the quarterly report.

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