As investors began to believe Elon Musk's optimism about driverless vehicles, Tesla Inc. concluded the previous year on a high note. It was another matter entirely to win over real vehicle customers.
Due in large part to the CEO's promotion of robots and artificial intelligence advancements, shares of the most valuable automobile manufacturer in the world surged in the second half.
Despite record deliveries in the third quarter, the business probably sold fewer cars in the last six months than it did a year ago, despite the improvements Musk boasted.
According to figures collated by Bloomberg, Tesla is anticipated to disclose on Friday that it delivered about 440,900 vehicles in the fourth quarter, a decrease of 11% from the same period last year.
This week, Tesla made the rare move of releasing its own average of analyst projections, which was even more negative and predicted a 15% loss.
Wall Street's view for 2026 has also become increasingly pessimistic. Analysts projected that Tesla would deliver over 3 million cars at this time two years ago. This year's average delivery forecast has dropped to about 1.8 million.
"Tesla investors are really discounting what they see in the near term and focusing on how the company might look five, ten, or fifteen years down the road," CFRA Research stock analyst Garrett Nelson stated over the phone.
"The question is, can they sustain that, particularly when we anticipate that the financials will show more headwinds?" 2025 was a turbulent year, even by the standards of Musk and Tesla, two names associated with instability.
Due in part to the corporation retooling production lines at each of its auto facilities for the revamped Model Y, its most popular vehicle, the carmaker's vehicle sales got off to a terrible start.
The strong criticism of its CEO's work for US President Donald Trump was another significant contributing element. Tesla's stock had fallen 45% for the year by early April, when Musk was publicly at odds with administration officials over tariff policy.
By leaving the government and going back to work on a long-term objective launching a ride-hailing company using vehicles that he claims will eventually be autonomous Musk accelerated the recovery.
Tesla introduced an invite-only Robotaxi service in Austin in June. Safety operators are on board to oversee each Model Y that is transporting Musk enthusiasts throughout the Texas city.
Investors have dismissed the safety worries despite the fact that the vehicles broke traffic laws on day one, attracting the attention of a federal regulator who launched several probes into the company's driving systems.
Then, in September, the board of Tesla suggested a new compensation package for Musk that could pay him up to $1 trillion, contingent on reaching objectives like delivering millions of robotaxis.
Tesla shares were trading higher for the year shortly after the comeback was complete. In just over eight months, the company's market valuation had increased by more than $915 billion when the stock closed at a new all-time high on December 16.
Although investors have been enthralled with Tesla's robotaxi prospects, automobile owners have been more cautious. Musk has admitted that it is difficult to convince customers to buy what Tesla refers to as Full Self-Driving, or FSD, a set of characteristics that still need human supervision.
Early this year, the state may suspend Tesla's sales license for 30 days due to allegations that the firm is deceiving Californians by inflating the automated-driving capabilities of its cars.
With BYD Co. and Xiaomi Corp. offering comparable technologies as standard equipment, Tesla's attempt to separate out in China's competitive electric vehicle market with driver-assistance capabilities is also failing.
Analysts predict that BYD, a carmaker based in Shenzhen, will have sold more battery-electric vehicles globally for a fifth consecutive quarter, mostly because to the company's significantly stronger sales in China and a surge of momentum in Europe, where Tesla has failed to secure regulatory permission for FSD.
In 2026, Tesla will face additional challenges following its second consecutive yearly sales decrease, which was widely predicted.
Musk has cautioned that the US's decision to stop providing federal tax incentives for EV purchases and leases could result in "a few rough quarters."
The reduction of US governmental assistance, which has caused major manufacturers to reduce their investments in electric vehicles, is seen by some as a bright spot.
Last month, Ford Motor Company stated that it anticipates filing charges of roughly $19.5 billion related to the abandonment of EV and battery projects that were bound to lose money.
Musk created excitement about Cybercab, a two-seat small car with butterfly doors, as the year came to a finish. Robyn Denholm, the head of Tesla's board, told Bloomberg News in October that although the prototype he first exhibited in late 2024 lacked a steering wheel and pedals, the business will offer the vehicle with such parts if regulators want them.
According to Gene Munster, managing partner at Deepwater Asset Management, "investors have fully bought into his autonomous vision, which comes at a good time, as Tesla's EV business will likely be flat to up 5 percent next year." "At this point, all Elon needs to do to appease investors is for the auto industry to stabilize over the coming year."
