Tesla can't keep up

At a glance, you might think Tesla is speeding ahead of its rivals: The company reported record deliveries of 497,099 for the third quarter, while sales jumped 7% year over year. Last Wednesday, the company reported a 12% increase in revenue for Q3 after two straight periods of declines.

But there’s a catch: Part of the reason for this standout quarter was the approaching expiration of the $7,500 federal EV tax credit, which spurred many American consumers to rush out and buy electric vehicles before they got more expensive. Now that the tax credit has expired, it doesn’t bode well for the future of the company.

And while its top line was robust, Tesla missed profit expectations, sending the stock stumbling after the announcement Wednesday.

The EV drag race

Zooming out from Q3, the results don’t look much better: Despite the standout quarter, Tesla is still on track for its second straight year of delivery declines. That metric looks even worse when you realize that the broader EV market has expanded over that time period.

Part of what’s holding Tesla back is its stiff competition from China, which has its own fleet of EV startups that offer cheaper cars. Another issue is Elon Musk’s right-wing political antics, which have hurt sales abroad and alienated many from the Tesla brand. As if external competition and internal strife weren’t enough, the company has also failed to design a newer, affordable model as popular as the Model Y, according to Bloomberg.

But all of those headwinds haven’t stopped Tesla evangelists from going all-in on Musk’s empire. Just look at what Dan Ives, a noted Tesla bull, had to say about the earnings on Wednesday: “We continue to believe Tesla could reach a $2 trillion market cap in early 2026 in a bull case scenario and $3 trillion by the end of 2026 as the golden AI chapter takes hold at Tesla.”

What’s got Tesla investors so optimistic? Robots. Or at least, the idea of them.

Musk has made his optimism about Optimus, Tesla’s humanoid robot, well-known. The AI-powered bot hasn’t sprinted out of the gate, but “Optimus” received far more mentions on the last earnings call (36 mentions) than even the company’s vaunted “robotaxi” rollout (a measly 10 mentions).

But before its android army takes over the world, Tesla needs to get its CEO aligned with its corporate aspirations. Musk’s gargantuan pay package is set to be approved next month, and investors hope it will inspire Musk to focus full-time on Tesla as opposed to politics.

“We note that the company will vote (we believe will be approved by a wide margin despite some opposition) on Musk’s pay package at the November 6th shareholder meeting which will be incremental to keeping Musk as a war-time CEO as the company enters a critical inflection point,” added Ives.

The next hurdle is a new version of the Optimus robot rolling off the assembly line sometime in Q1 2026. After that, who knows where the erstwhile EV company will go next.—LB