Why Tesla Stock Dropped Ahead of Quarterly Deliveries

Tesla (NASDAQ: TSLA) is expected to provide its quarterly vehicle delivery report tomorrow. Some investors are selling the stock today ahead of that report. Tesla shares dropped as much as 5% before paring some of that drop. The stock was trading lower by 2% as of 2 p.m. ET.

Negative sentiment may have been heightened by news from several of Tesla's Chinese competitors. Data released today showed those competitors reported record monthly electric vehicle (EV) deliveries in September. Domestic competitor General Motors also said its U.S. EV sales surged in the third quarter.

Bad news or good news?

Investors are looking at that growing competition as a negative indication for Tesla's sales prospects. With GM's quarterly EV sales growing 60%, its share of the U.S. EV market reached 9.5%. That market share has increased steadily throughout 2024 as the company has launched new EV models.

In Tesla's important Chinese market, growing competition from manufacturers including Nio, XPeng, and Li Auto combined to deliver more than 96,000 EVs in September, a new monthly record for the group. That represented growth of 44% year over year for the trio of EV makers.

Investors knew competition would grow in the EV market in 2024. Large and small EV makers are expanding vehicle lineups. GM, for example, has electric versions of its popular Chevy Blazer, Equinox, and Silverado models launching.

After Tesla stock has surged 20% higher over the last month, some investors are cashing out as they seem to be assuming all that data is bad news for Tesla. But it's also possible that a slowdown in EV sales growth earlier this year may be reversing course.

Investors will know for sure when Tesla itself reports its third-quarter delivery results tomorrow. Analysts expect about 463,000 deliveries, representing a 6.5% increase year over year. If the company beats expectations it could show that the overall EV pie is growing. That would be bullish news for Tesla and its stock.

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Howard Smith has positions in Nio, Tesla, and XPeng. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends General Motors and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.