Tesla shatters vehicle sales record as it clears inventory to beat analyst expectations

Tesla reported a record amount of 497,099 vehicles delivered in Q3 as buyers snatched any Model Y or Model 3 it could make before the federal tax credit expiration deadline. This includes clearing all inventory units as well, since Tesla was only able to manufacture 447,000 vehicles in Q3.

The Model Y and Model 3 accounted for nearly 97% of all Tesla deliveries and were in such high demand that it had to raise lease prices mid-quarter and cut some incentives and promos it had started at its beginning.

Bloomberg analysts expected that Tesla will deliver way fewer vehicles in Q3 - 439,600 units on average - but the tax credit expiration alone proved the most robust incentive as it took $7,500 off the price of a vehicle at the point of sale directly. Tesla managed to beat its deliveries by 7.4% year-on-year, quite the respite in a year marred by unrelenting sales and profit drop due to Elon Musk's political activism and a softer EV market.

Tesla has seemingly managed to take full advantage of the federal subsidy expiration boost, postponing some expected new releases for the holiday quarter when it no longer enjoys the government's largesse. It will also face a more fierce competition by the likes of Hyundai, which just started a price war by lowering the tag of its Model Y competitor, the 2026 Ioniq 5, by up to $9.800.

To offset the tax credit loss for its customers in Q4, Tesla introduced a $6,500 lease credit and will be riding on the wings of two fresh Model Y versions. On the top end, it released the 2026 Model Y Performance trim on the eve of the tax credit expiration deadline, allowing early adopters to still order and get advantage of the $7,500 discount, while throwing in free colors, interior, and tow package for those who couldn't order by September 30.

In addition, Tesla has now entered mass production of the cheapest Model Y trim that should be released soon at a price comparable to what its bestselling vehicle used to cost with the tax credit discount. Whether or not a cheaper, stripped down Model Y will be a sales success remains to be seen though, as a similar move with the RWD Cybertruck didn't pan out as Tesla intended, and it deprecated the trim rather quietly.

Tesla will report its Q3 2025 earnings on Wednesday, October 22, and there should be more details on how has its sales record been reflected in the operating profit, as well as on its future vehicle release plans.

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