By William Gavin

Investors have become less interested in Tesla's EV business lately, but Friday's report still has the potential to be market-moving

Tesla's electric vehicles account for the majority of the company's revenue.

Tesla could have trouble meeting the high bar it set with its quarterly delivery report a year ago.

The company (TSLA) on Friday is expected to report third-quarter deliveries of 461,000 electric vehicles, a 7% decline compared to the year-ago quarter, according to analyst estimates compiled by FactSet. That would also represent a drop of about 4% relative to the second quarter.

It's not too surprising that Tesla's sales will likely be down compared to last year, according to experts. Back then, Tesla and other sellers of EVs benefited from the Trump administration's decision to end federal tax credits by Sept. 30, 2025, which pushed consumers to expedite their purchases.

Tesla sold 497,000 EVs in the third quarter of 2025, marking its second-best performance ever on that metric.

Since then, the broader U.S. EV market has been relatively sluggish. The research firm Cox Automotive has forecast a 45% drop in overall EV sales for the third quarter relative to a year earlier, and a 3% decrease compared to the June quarter.

Stephanie Valdez Streaty, Cox's director of industry insights, said on a recent webinar that new EV sales were "stabilizing." Hybrid vehicles, on the other hand, are the "clearest growth story" in the electrified-car market, she said - a win for companies like Toyota Motor (TM) (JP:7203).

Tesla's sales have likely been impacted by its decision to stop selling a pair of luxury cars earlier this year in order to make room in its Fremont, Calif., factory to produce humanoids robots. Elevated fuel costs in the U.S. have also failed to give EV sales much of a boost, according to RBC analyst Tom Narayan.

However, Tesla's declines aren't isolated to the U.S. In a recent note to clients, Goldman Sachs analyst Mark Delaney said European registration data will likely reflect a 25% to 35% sales decline in the third quarter compared with the same time last year. Sales in China, another key market, were likely down in the "high-teens range" last quarter compared to a year earlier, Delaney said.

That's not great news. Car sales account for the bulk of Tesla's revenue, which it needs to fund flashier projects like robotaxis and humanoid robots that can excite investors.

Tesla expects to spend more than $25 billion on capital projects this year, which will likely make 2026 its most expensive year on record. Earlier this week, it secured $30 billion in senior unsecured credit facilities to help it fund its plans.

Despite the revenue that EVs generate, Tesla investors have become more interested in other themes. Morningstar analyst Seth Goldstein told MarketWatch that what investors really care about is progress on robotaxis and robots.

"We do not believe that vehicle deliveries matter that much for the stock (though note it can create noise on the day they are reported) as investors increasingly are not focused on the traditional auto business," UBS analyst Joseph Spak wrote in a note to clients.

Analysts also expect Tesla to have deployed 15.9 gigawatt hours of energy-storage products last quarter, according to estimates compiled by the company.

-William Gavin

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10-01-26 1143ET