Tesla (NASDAQ:TSLA) started 2026 on a somber note, reporting fourth-quarter delivery figures that fell short of Wall Street expectations and confirmed a second straight year of shrinking annual sales.
The electric vehicle pioneer delivered 418,227 vehicles in the final three months of 2025, a significant 15.6% drop from the 495,570 units delivered in the same period a year earlier.
Analysts had expected the company to clear at least 434,487 units.
The miss brings Tesla’s total 2025 deliveries to 1.64 million, down from 1.79 million in 2024.
This 8.4% annual decline underscores the persistent "demand cliff" following the Trump administration’s decision to terminate the $7,500 federal EV tax credit in September 2025.
While a Q3 surge was driven by customers rushing to lock in the subsidy, the ensuing Q4 vacuum proved deeper than many anticipated.
In response to the subsidy withdrawal, Tesla introduced "Standard" versions of its flagship Model 3 and Model Y in October, slashing base prices by roughly $5,000.
While these stripped-down models were intended to defend market share, the move appears to have been insufficient to counter a "perfect storm" of rising interest rates, intensified competition from domestic rivals like Rivian—which met its own 2025 targets—and a cooling sentiment in Europe and North America.
The company produced 432,608 vehicles in Q4, leading to a build-up of approximately 14,000 units in inventory.
This surplus raises concerns about further price cuts in early 2026, which could continue to compress automotive gross margins that were already under stress throughout 2025.
Despite the softening auto business, Tesla shares finished 2025 up 11.4%, largely fueled by Elon Musk’s "Master Plan Part 4" pivot.