Tesla delivered far more vehicles in the second quarter than Wall Street expected, and investors sold the stock anyway. Shares of Elon Musk's electric-vehicle maker sank 7.49 percent Thursday, their worst session in almost a year, hours after Tesla reported a 25 percent year-over-year jump in deliveries that blew past analyst forecasts.
The reaction extended a streak: Tesla's stock has now fallen on each of the last three quarterly delivery reports. What made Thursday's drop sharper was the size of the beat. Analysts polled by StreetAccount had penciled in about 406,600 deliveries, and Tesla's own company-compiled consensus was 406,024, according to CNBC. Model 3 sedans and Model Y SUVs alone accounted for 467,762 vehicles, or 97 percent of the total — a 34 percent jump from the 358,023 units Tesla delivered in the first quarter of 2026 and a rebound from the roughly 384,000 vehicles the company reported in the same period a year earlier.
Europe carried the quarter
The clearest driver of the beat was Europe. Semafor reported that Tesla's European sales have recovered as fuel prices climbed, with Germany posting a 300 percent rise in Tesla sales in May and Europe-and-U.K.-wide sales up 57 percent year-on-year in the first five months of 2026. The rebound came despite persistent public antipathy toward Musk; Semafor noted an effigy of the CEO was hung upside down in Milan.
That tailwind may already be fading. Oil prices spiked when war broke out in Iran in February but have since returned to roughly where they traded before the conflict, CNBC reported, as a fragile truce between the U.S. and Iran and continuing diplomatic efforts calmed markets. In the United States, buyers have moved from fully electric vehicles toward hybrids, said Dan Hearsch, managing director at AlixPartners.
"We have a huge country, and people live far away from each other compared to Europe where the charging infrastructure is better and people don't have to drive quite so far," Hearsch said.
Related-party questions
Tesla does not break out sales by region or model, and the company did not disclose whether related-party transactions contributed to the strong numbers. SpaceX, which owns xAI, bought $269 million worth of Tesla Megapacks in April, according to its IPO filing; the batteries are powering xAI data centers in and around Memphis, Tennessee. Last year, SpaceX spent $131 million on Tesla Cybertrucks, a large portion of the 20,237 Cybertrucks Tesla sold in 2025, according to Kelley Blue Book.
Tesla's energy business, which was reported separately, deployed 13.5 gigawatt-hours of storage in the second quarter, compared with 9.6 a year ago. Analysts had expected 13.3.
The autonomous pivot
The company has told investors it is "optimizing" its lineup "with an emphasis on vehicles designed for a fully autonomous future" and has said it expects "volume production of both Cybercab and the Tesla Semi this year." Tesla said in January that it would stop producing the Model S and Model X and repurpose their Fremont, California, factory lines to build Optimus humanoid robots.
Tesla did not address the stock decline in Thursday's release, and the bearish case that drove the sell-off was not detailed by any analyst quoted in the wire coverage. What is known: Tesla continues to face pressure from Chinese rivals BYD, Nio and Xiaomi, and from Hyundai Motor Group and Volkswagen in Europe; U.S. federal EV tax credits have expired; and BYD overtook Tesla last year as the world's biggest EV manufacturer, according to Semafor.
Tesla plans to report second-quarter financial results after the market close on Wednesday, July 22.