Tesla's Q3 Deliveries May Surprise to the Upside

Key Points

• UBS now expects higher deliveries in the third quarter, citing improving order momentum.

• A redesigned Model Y arrives just as the $7,500 federal electric vehicle tax credit approaches its deadline.

• Recent delivery trends set a modest bar: a rebound from the first quarter but still down year over year.

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Shares of Tesla (NASDAQ: TSLA) have been volatile into quarter-end, with investors fixated on next week's delivery report. The electric-vehicle (EV) maker sells mass-market cars like the Model 3 and Model Y, plus premium vehicles including the Model S, Model X, and Cybertruck. The near-term debate is whether third-quarter deliveries can top expectations after a softer first half of the year.

There is a credible case for an upside surprise. Financial company UBS recently lifted its estimate for Tesla's third-quarter deliveries, and two near-term tailwinds line up with that call: the approaching deadline for the federal EV tax credit and a well-timed Model Y refresh. Put together, demand may have strengthened enough to help the company return to growth.

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A return to growth is possible

UBS is now modeling for about 475,000 deliveries in the third quarter, a figure that exceeds the consensus analyst estimate ahead of the report. And that would be a return to year-over-year growth in the key metric.

UBS argues that U.S. buyers have an extra reason to act before the Sept. 30 cutoff for the $7,500 federal EV tax credit, and international demand looks steadier than earlier in the year.

The tax credit timing matters. Tesla's own messaging has emphasized the deadline's significance. That urgency has likely pulled some fourth-quarter demand into September.

Product innovation helps, too. The redesigned Model Y -- a comprehensive update to the company's best-selling vehicle -- began rolling out earlier this year with a quieter cabin, revised exterior lighting, updated interior materials, and a rear passenger display.

The update gives undecided buyers a fresh reason to choose a Model Y right as tax-credit driven traffic picks up. The company also continues to market full self-driving (while supervised) as a subscription add-on, and it has said it is preparing for broader releases, including in new markets, subject to regulatory approvals.

Visibility for these advanced driver-assist features -- along with pilot Robotaxi testing now approved in Arizona -- keep Tesla in the autonomy conversation and help the brand stay in front of shoppers.

Signs of a bottom

Context from the last two quarters clarifies why an upside surprise is plausible. In the second quarter of 2025, Tesla delivered more than 384,000 vehicles, down from about 444,000 in the second quarter of 2024. That year-over-year decline set a cautious tone, but it also was an improvement from the first quarter, when deliveries totaled about 337,000 as the company paused production lines to transition factories to the new Model Y.

So the second quarter represented a sequential step forward, even as the company navigated a challenging comparison against the same period last year.

Heading into the third quarter, the two catalysts above -- deadline-driven purchases and a stronger Model Y lineup -- could be enough to extend that sequential progress. If deliveries land near the mid-470,000s, the narrative about the company's delivery trends could shift positively. That would not solve every concern, but it would reset expectations for the back half of the year.

Still, there are several key risks that investors should consider. If expiring incentives pull demand into the third quarter, fourth-quarter deliveries could underwhelm even if the third quarter looks strong.

Also, competitive pressure remains intense in China and Europe. And while Tesla's self-driving efforts have kept the EV maker in headlines, true autonomy remains subject to regulation and ongoing validation, which means timelines can slip.

Lastly, the stock's valuation (about 250 times earnings) already reflects extreme optimism; even a "beat" on deliveries may not translate into lasting share gains if investors worry about the fourth quarter.

A refreshed Model Y landing at the same time as a widely publicized tax-credit deadline is a powerful combination. If that pairing drives deliveries above expectations, it can help investors gain more confidence in a future reinvigoration of the company's key automotive business.

Shares would still be risky, given the growth stock's sky-high valuation. But a return to growth would definitely be a move in the right direction.

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Daniel Sparks and/or his clients have positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.