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Investing.com -- Tesla (NASDAQ:TSLA) shares have risen 35% since June earnings, outperforming the Nasdaq’s 9% gain, as investors embrace the company’s long-term vision despite potential delivery challenges ahead.
Deepwater Asset Management cofounder Gene Munster believes Wall Street’s delivery expectations for December and full-year 2026 are overly optimistic. While analysts project 17% growth next year, Munster anticipates deliveries will end up roughly flat, with a modest 5% increase at best, following a 13% decline in the first half of 2025.
Despite this potential downward revision to delivery estimates, Munster doesn’t expect a negative reaction in Tesla shares, noting that other automakers’ retreat from electrification creates a long-term advantage for Tesla in the autonomous vehicle market.
The core investment case for Tesla remains its position to capitalize on "physical AI" through robotaxi, Full Self-Driving (FSD), and Optimus robot initiatives. Munster estimates 50-75 robotaxi vehicles currently operate in Austin and the Bay Area, up from approximately 35 three months ago, with testing underway in Phoenix and Las Vegas (10-15 vehicles each).
Tesla aims to expand to 20-23 U.S. metropolitan areas by the end of 2026, pending regulatory approvals. Investors will be watching whether CEO Elon Musk reiterates his previous statement that the robotaxi fleet will grow "from tiny to gigantic" with "material impact on our financials around the end of next year."
FSD updates have been limited, with Musk previously stating it would be available for personal use by year-end in certain regions. This remains a risk factor with only 10 weeks left in the year.
Tesla’s earnings face potential headwinds from changes to regulatory credit sales, which have accounted for up to 45% of net income in peak quarters. The company reduced its remaining regulatory-credit related RPO from over $4.58 billion to around $3.47 billion in June. Wall Street expects regulatory credit revenue to decline from $2 billion in 2025 to $1.6 billion in 2026 and $1.1 billion in 2027, as U.S. fuel economy requirements for traditional automakers relax.
Tesla will report its earnings on Wednesday.
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