Tesla Inc. shares fell after the automaker posted a record quarter of vehicle sales that will be difficult to replicate now that federal electric-car subsidies have expired.

The company delivered 497,099 vehicles worldwide in the most recent quarter, 7.4% more than a year ago. Although the total far exceeds the roughly 439,600 average analyst estimate compiled by Bloomberg, Tesla’s shares slumped Thursday following a record monthly gain in market capitalization.

The divergence illustrates how investor sentiment has become increasingly detached from Tesla’s core electric vehicle business, focused instead on the potential profit to be reaped by its still-developing robotaxi, artificial intelligence and robotics ventures, which Musk has said will drive company’s future market value.

Despite weak EV sales in the first half of 2025, carmaker’s shares soared 33% in September, recouping early-year losses and adding $401.9 billion of market value. Tesla’s shares fell 3.6% as of 3:25 p.m. in New York.

“We see no change to our thesis and believe astute investors are looking beyond near-term delivery volatility to higher-margin” initiatives such as Tesla robotaxis and Optimus humanoid robots, Benchmark analyst Mickey Legg said in a note to clients.

A rush to take advantage of a $7,500 tax credit for EV purchases delivered a temporary boost to Tesla’s core automotive business, which languished for several quarters under the weight of an aging lineup and rising competition. The company also faced a consumer backlash to Chief Executive Officer Elon Musk’s politics as he worked closely with President Donald Trump early this year.

The phase-out of EV tax credits in the US after Sept. 30 helped drive widespread demand for electric models from the likes of General Motors Co., Ford Motor Co. and [hotlink]Hyundai Motor[/hotlink] Co. last quarter. Rivian Automotive Inc. also reported better-than-expected vehicle deliveries, though the EV maker narrowed its annual guidance toward the lower end of its prior range.

“This sense of urgency created consumer reaction, and we’re seeing that in the data,” Stephanie Valdez Streaty, director of industry insights at Cox Automotive, said on Bloomberg Television. “It’s going to be challenging going forward,” she added, predicting a slowdown in the fourth quarter.

Tesla’s deliveries tally offers a preview of the earnings results scheduled for Oct. 22. Next month the company will hold its annual general meeting, where investors will vote on a new compensation package for Musk potentially worth $1 trillion.

The Model Y SUV and Model 3 sedan continue to do the heavy lifting for Tesla, with combined sales of those two rising 9.4% to 481,166 vehicles last quarter. Sales of other Teslas — the Model X, Model S and Cybertruck — fell 30%.

The company also reported that it deployed 12.5 gigawatt hours of energy products during the quarter, up from 6.9 GWh a year ago. The company unveiled a next-generation energy-storage system during the quarter, along with a new product called Megablock that combines storage units with a transformer and switchgear.

Tesla has yet to offer many details about the more affordable version of the Model Y that could help buoy sales now that federal EV tax credits have ceased in the US. Executives have said that while initial production started in June, they elected to put off the launch until the fourth quarter and cautioned that output will ramp up slower than initially expected.

While the tax credit expiration boosted third-quarter sales, the pull-forward effect could mean weaker EV demand in the final months of the year. Musk has warned Tesla could face several “rough quarters” after the incentives go away and before the company’s autonomous vehicles deploy at scale.

“While the numbers were better than expected, we think it is important to highlight the data is backward-looking,” said Garrett Nelson, an equity analyst CFRA Research. “Looking ahead, we think there are still major questions regarding the earnings impact of legislative changes on the tradeable emissions credit market and EV demand in an unsubsidized US market.”

Aside from the tax credit, the Trump administration has also moved to unwind fuel economy and emissions requirements, choking off regulatory credit revenue that supported Tesla for years.

Wall Street is still expecting Tesla to log its second consecutive annual sales decline. Analysts surveyed by Bloomberg project the company will deliver around 1.61 million vehicles in 2025, down from 1.79 million last year.

Tesla investors look past a record quarter of vehicle deliveries