Elon Musk's $54 billion misstep played out on Thursday after Tesla delivered 358,023 vehicles in the first quarter of 2026, missing Wall Street's consensus estimate of around 370,000 and marking its softest quarter in a year. Shares fell 4.8% on the news, wiping that sum from the company's market value in a single session.
The figures landed against a difficult backdrop. The expiry of a $7,500 federal tax credit in the US at the end of September removed a significant incentive for buyers, while regulatory delays in Europe have held back the rollout of Tesla's Full Self-Driving system, pressing down demand across the region.
Inventory gap widens
Production outpaced deliveries by 50,363 vehicles in the quarter, the widest such gap in at least four years, pointing to a build-up of unsold stock. Model 3 and Model Y deliveries came in at 341,900, below the Street's 355,000 estimate, though other models delivered 16,100 units, ahead of the 12,400 forecast.
The energy storage division was the other notable miss. Tesla deployed 8.8 gigawatt-hours of storage products in the quarter, down 15.4% from a year earlier and well short of analyst expectations of 14.4 gigawatt-hours. Wedbush Securities noted the shortfall partly reflects preparations for shipments of the next-generation Megapack 3 and Megablock products under a recently signed deal with LG.
China provides some cover
Against the broader weakness, China offered a positive. Tesla's China-made vehicle sales rose for a second consecutive quarter, with deliveries for the first two months of 2026 up 35% year-on-year to 127,728 units, including 91% growth in February, according to Wedbush.
Europe, which weighed heavily on Tesla's global numbers last year, has shown signs of stabilising, with the company gaining ground in markets including France. A Dutch regulatory decision on FSD approval is expected this month, which could open the door to a wider European rollout and provide a demand boost in the second half of the year.
Investors look past the car numbers
Wedbush Securities, which maintains an Outperform rating and a $600 price target on the stock, said the soft delivery figures were no shock given the current EV environment. Analyst Dan Ives said the investment focus has shifted firmly towards Tesla's artificial intelligence ambitions, including its robotaxi service, FSD subscription model, and humanoid robotics programme.
Tesla has begun rolling out unsupervised robotaxi rides in Austin, with volume production of its Cybercab model due to start in April or May. The company is also converting its former Model S and Model X manufacturing facilities into production lines for its Gen3 Optimus robot, targeting an eventual rate of one million units a year. Wedbush puts total capital expenditure tied to these new factories, including AI compute, at around $20 billion.
FSD moved to a subscription-only model in February, a shift Wedbush expects to push penetration above 50% and reshape Tesla's financial margins over time.