Tesla, Inc. (TSLA.US) delivered impressive Q3 volumes, but Wells Fargo & Company warned that the good times may be coming to an end.

According to a research report released by Wells Fargo & Company, although Tesla, Inc.'s (TSLA.US) delivery volume in the third quarter of 2025 significantly exceeded market and institutional expectations, factors such as the expiration of the US electric vehicle tax credit and pressure on future demand have led Wells Fargo & Company to maintain a cautious attitude towards its short-term growth. The bank maintains a "sell" rating for Tesla, Inc. with a target price of $120, suggesting a downside potential of over 70% for the stock in the future. The delivery report shows that Tesla, Inc. delivered a total of 497,099 vehicles in Q3, which is not only 20.7% higher than Wells Fargo & Company's own forecast of 412,000 vehicles, but also 12.2% higher than the market consensus of 443,079 vehicles, achieving a 7% year-on-year growth and 29% quarter-on-quarter growth. It is worth noting that Wells Fargo & Company's calculations show that Tesla, Inc.'s Q3 inventory decreased by approximately 50,000 vehicles, and its delivery volume in China, the EU, and the US markets declined by about 11% year-on-year in August and September, indicating that the key driver of overall Q3 deliveries was the significant increase in the month of September. In addition, Tesla, Inc.'s energy storage business also saw growth, deploying 12.5GWh of energy storage products in Q3, a significant increase from 9.6GWh in Q2. Despite the delivery data exceeding expectations, Tesla, Inc.'s stock price fell on the day the report was released, reflecting investors' concerns about its short-term growth potential. Wells Fargo & Company's analysis points out that the better-than-expected Q3 deliveries were mainly driven by sales promotions before the policy expiration, rather than natural demand growth. To mitigate the impact of the expiration of the US electric vehicle tax credit policy, Tesla, Inc. introduced multiple incentives in Q3, such as a maximum $2,000 discount on inventory Model Y/3 vehicles in the US market, 18 months of free supercharging service for Model 3 vehicles in the US and Canada markets, as well as other supercharging packages. Additionally, Tesla, Inc. added a $6,500 leasing subsidy to further boost sales promotions. Price pressure was also evident, with Wells Fargo & Company estimating a slight decrease in average order prices in Q3, including a 1% decrease in pricing for Model Y/3 vehicles. The bank predicts that Q3 will likely be the strongest quarter in terms of delivery volume in the near future for Tesla, Inc., and to sustain delivery volumes, the company will need to continue to introduce attractive incentives and discounts to offset the impact of the expiration of the $7,500 tax credit. Based on assessments of future demand and profit pressures, Wells Fargo & Company has lowered its core performance expectations for Tesla, Inc. in 2025: it anticipates an annual delivery volume of around 1.48 million vehicles, a 13% decrease compared to the previous year, significantly lower than the market consensus of 1.64 million vehicles; and has also lowered its earnings per share expectations for 2025 to a level 29% lower than the market consensus, mainly due to concerns about weak Q4 deliveries, pressure on profit margins, and a decrease in regulatory credit income.