Tesla is set to report its fourth-quarter electric vehicle deliveries on or around January 2, capping a second year of declining sales amid fierce competition. Despite a 25% stock rise in 2025, the company's high valuation raises doubts about its investment appeal. Investors are eyeing future products like the Cybercab and Optimus, but near-term challenges dominate.
Tesla, one of the world's largest electric vehicle manufacturers, is grappling with weakening demand as cheaper rivals erode its market position. The company delivered 1.79 million EVs in 2024, a 1% decline from the prior year and its first annual drop since launching the Model S in 2011. This trend worsened in 2025, with deliveries falling 6% year over year through the first three quarters ending September 30. Analysts expect around 450,000 vehicles in the fourth quarter, bringing the full-year total to 1.67 million—a 7% decrease from 2024.
Competition, particularly from BYD, is intensifying in key markets. BYD's Dolphin Surf sells for $26,900 in Europe, compared to Tesla's Model 3 at $44,300. In November, Tesla's European sales dropped 12% year over year, or over 36% excluding Norway due to expiring tax credits. Its market share there slipped to 1.6% from 2.4% a year earlier.
Despite these headwinds, Tesla's stock has climbed over 25% in 2025, trading near record highs on optimism for upcoming products. The Cybercab robotaxi is slated for mass production in 2026, relying on full self-driving software not yet approved for unsupervised use in the U.S. Rival Waymo already completes 450,000 paid autonomous trips weekly in five cities. CEO Elon Musk envisions the Optimus humanoid robot generating $10 trillion in long-term revenue, potentially outnumbering humans by 2040, with mass production eyed for late 2026 and scaling to 1 million units annually.
However, over 70% of Tesla's revenue still derives from EV sales. With trailing 12-month earnings of $1.44 per share, the stock's price-to-earnings ratio stands at 322—nearly 10 times the Nasdaq-100's 33 and far exceeding peers like Broadcom in the $1 trillion club. This valuation, amid profit declines, suggests risks of a correction before new products contribute meaningfully.