Key Morningstar Metrics for Tesla
- : USD 450Fair Value Estimate
- : ★★★Morningstar Rating
- : NarrowMorningstar Economic Moat Rating
- : Very HighMorningstar Uncertainty Rating
Tesla TSLA reported 480,126 deliveries during the second quarter. The shares were down 6% at the time of writing on July 2.
Why it matters: Deliveries were up 25% year over year and nearly 20% above the company-compiled consensus estimates. We attribute the strong growth to increasing market share in Europe, which includes the European Union, United Kingdom, and European Free Trade Association countries.
- We see structural electric vehicle growth in Europe as long-range EVs become more affordable versus internal combustion engine vehicles and the fast-charging network is built out along major highways and in cities throughout the continent.
- Tesla’s full self-driving software is starting to be approved for use by multiple European countries. This should drive deliveries growth due to consumer enthusiasm for the product. This should increase Tesla deliveries faster than European EV growth.
The bottom line: We raise our fair value estimate for narrow-moat Tesla to USD 450 per share from USD 425. The increase is due to our outlook for higher deliveries in 2026 versus our prior forecast. Higher deliveries will also drive higher automotive gross profit margins.
- Given the good deliveries news, we were surprised by the July 2 selloff. We view Tesla shares as fairly valued, trading roughly 10% below our updated fair value estimate but in 3-star territory. We recommend that investors wait for a larger margin of safety before considering an entry point.
Coming up: Tesla will report second-quarter results on July 22. We hope to hear an update on Tesla’s robotaxi growth plans as well as the timeline for the deployment of unsupervised FSD for Tesla owners. We see a higher price for unsupervised FSD driving higher profit growth for Tesla over time.
