The Elon Musk-helmed company saw its delivery numbers soar after a shaky few quarters. Photo by Katherine KY Cheng/Getty Images
The end of U.S. electric vehicle tax credits is expected to pose long-term challenges for industry leaders like Tesla. But the policy’s looming expiration fueled a surge in sales in the latest quarter. Tesla delivered 497,099 vehicles in the July-September quarter, a record high and up 7 percent from the same quarter last year. The strong quarter marks a turnaround for the carmaker, which has struggled with intensifying EV competition and growing backlash over CEO Elon Musk’s political activity. Its previous quarterly results showed deliveries of 384,122, a 13.5 percent year-over-year drop and the company’s second consecutive decline.
The rush in sales was driven in large part by the September 30 termination of federal EV tax credits, which offered up to $7,500 per purchase. The policy change, enacted earlier this year by President Donald Trump, spurred buyers to close deals before the deadline. Tesla wasn’t the only beneficiary—Cox Automotive projects total U.S. EV sales in the third quarter will reach 410,000, a 21 percent increase over last year.
“This was a great bounce back quarter for (Tesla) to lay the groundwork for deliveries moving forward,” said Dan Ives, a Wedbush Securities analyst, in a client note. Nevertheless, “EV demand is expected to fall with the EV tax credit expiration,” he warned. Tesla shares are down by more than 4 percent today (Oct. 2).
Whether Tesla can sustain this momentum remains uncertain. Musk has increasingly positioned his company around a future dominated by self-driving cars and robotics, rolling out autonomous cars in Austin this summer. But for now, the bulk of Tesla’s revenue continues to come from EV sales, accounting for nearly three-quarters of its $22.5 billion in revenue last quarter.
The company faces particular headwinds in Europe, where political backlash has weighed heavily on sales. In the first eight months of 2025, Tesla registrations in European Union countries fell 43 percent compared to the same period last year, according to data from the European Automobile Manufacturers’ Association. August alone saw a 36 percent year-over-year drop. Overall, however, EV adoption in the EU continues to climb, with market share rising to 15.8 percent from last year’s 12.6 percent.
In China, Tesla is also losing ground. Shipments from its Shanghai Gigafactory reportedly fell 4 percent year-over-year in August, marking declines in seven of the past eight months. In an effort to combat local EV rivals, Tesla recently introduced its Model Y L to the region.
One bright spot for the company is its energy storage unit. The unit deployed 12.5 GWh of storage products over the past three months, up more than 80 percent from last year. The business, which includes Megapack and Powerwall battery systems, is gaining traction with utilities and companies expanding their A.I. infrastructure. Musk’s own A.I. startup, xAI, was among its clients, contributing nearly 2 percent of Tesla’s $10 billion in energy revenue last year.
