Last Chance for EV Incentives? Tesla's Stock Surges as Buyers Rush In

Tesla has delivered its strongest quarter of 2025, driven by a surge of US consumers racing to take advantage of a federal electric vehicle (EV) tax credit before it expired.

The company reported 497,099 deliveries in Q3, far exceeding Wall Street's forecast of 447,600, according to CNBC.

The spike in deliveries coincided with the end of the $7,500 (£5,600) EV tax credit on 30 September, prompting thousands of buyers to accelerate purchases.

Analysts believe this 'pull-forward' effect was a major contributor to the quarter's performance, with many consumers rushing to secure incentives before they disappeared.

Ken Mahoney, CEO of Mahoney Asset Management and a Tesla shareholder, told reporters: 'The $7,500 credit definitely should have some effect that pulled forward demand this quarter.'

TSLA Stock Rallies on Delivery Surprise

Tesla's stock (NASDAQ: TSLA) responded positively to the delivery beat, climbing over 2% in early trading on Thursday. The rally reflects renewed investor confidence in the company's ability to navigate regulatory changes and maintain strong sales momentum.

Market analysts had anticipated a volatile reaction, given the high expectations surrounding the Q3 delivery report. According to MarketMinute, projections ranged from 447,000 to as high as 509,000 units, with bullish forecasts driven by the tax credit deadline and the launch of Tesla's updated Model Y.

Despite the strong performance, some caution remains. Tesla's Q3 deliveries were still slightly below the 462,890 units delivered in the same quarter last year, suggesting that while the tax credit boosted short-term demand, broader challenges persist.

Expiring Incentives and Shifting Demand

The expiration of the federal EV tax credit marks a significant shift in the US electric vehicle market. Tesla, along with other automakers, had used the credit to offer competitive lease deals and reduce upfront costs for buyers. With the incentive now removed, analysts expect a temporary slowdown in sales as consumers adjust to higher prices.

Tesla's website showed an increase in car-leasing prices following the legislative change, although base vehicle prices remained unchanged.

CEO Elon Musk previously warned that Tesla could face a few rough quarters as subsidies disappear, before revenue from self-driving software and robotics begins to scale. Musk's long-term vision for Tesla includes a shift away from vehicle sales toward autonomous technology and AI-driven services.

Global Outlook: Strength in China, Weakness in Europe

While US sales surged in Q3, Tesla's performance in other regions was mixed. China saw strong momentum in September, aided by targeted price adjustments and the launch of the six-seater Model Y L. However, European sales lagged, with the ageing vehicle lineup and political controversies surrounding Musk dampening consumer sentiment.

Wall Street estimates suggest Tesla's full-year 2025 deliveries will reach approximately 1.85 million units. Analysts expect Q4 to be more subdued, as the tax credit boost is no longer in effect and competition intensifies across global markets.

Investment Perspective: Short-Term Gains, Long-Term Questions

Tesla's Q3 delivery beat and stock rally offer a short-term win for investors, but questions remain about the company's ability to sustain growth without government incentives. The transition to a post-subsidy market will test Tesla's pricing strategy, brand loyalty, and technological edge.

For now, the company's ability to mobilise buyers and outperform expectations suggests resilience. However, with Musk's ambitious plans for AI and robotics still in development, investors will be closely watching to see whether Tesla can maintain momentum or if this quarter marks a peak before a period of adjustment.