Tesla Stock Rises 5% Despite Falling Deliveries, Shrinking Market Share: What's Fueling the Rally?

TradingKey - In the Q2 2025, Tesla's global delivery fell by 13.5% year-over-year to 384,000, marking a two-digit decline for two consecutive quarters. However, its stock rose nearly 5%, with market capitalization increasing by $48.1 billion overnight.

(Source: TradingKey)

The main models, Model 3 and Model Y, accounted for the vast majority of deliveries, with 374,000 units, representing 97% of the total deliveries. In contrast, new models like the Cybertruck managed to sell only 10,400 units, highlighting the risk of Tesla’s product line being overly concentrated. For the first half of the year, Tesla's cumulative deliveries totaled 752,000 units—a year-over-year decrease of 12.7%—marking the first time since 2020 that the company has fallen below the 800,000-unit threshold.

In Europe, sales have declined for five consecutive months, with May showing a year-over-year drop of 27.9%. Moreover, Tesla’s share of the electric vehicle market decreased from 10% to 7.6%. In China, facing fierce competition from local brands like BYD and Xiaomi. The U.S. market is estimated to experience a decline of around 20%, with uncertainty heightened by the potential expiration of tax credit policies.

After two consecutive quarters of declining sales, analysts believe that Tesla is close to reaching a cyclical bottom and that its data is not as bad as feared. Deepwater analyst Gene Munster noted that Tesla's Q2 figures exceeded recent rumors by about 4%, suggesting this could be an annual low point. Wall Street’s earlier most pessimistic forecasts projected declines exceeding 20% (for instance, JPMorgan anticipated sales would fall to around 360,000), making the actual drop of only 13.5% viewed as having "priced in" negative sentiment.

Additionally, investors are betting on the long-term value of its autonomous driving (Robotaxi) business; a UBS report stated that the market is pricing in higher premiums for "expensive AI options."

However, in order for Tesla to achieve its annual sales growth targets for this year, it will need to deliver over one million vehicles in the second half alone—a sequential increase exceeding 40%. Weak demand in Europe and ongoing price wars in China might make this goal harder to reach. Moreover, conflicts between Elon Musk and Trump regarding the "Big  Beautiful Bill" may adversely affect returns from its solar and battery businesses.