Despite Elon Musk's ambitions to pivot Tesla's future toward artificial intelligence, he still relies on vehicle sales to fund these ventures—and the automotive business is facing growing challenges.

Analysts estimate that Tesla likely delivered approximately 372,160 vehicles over the past three months. Although this figure represents an 11% increase compared to the same period last year, it remains on the lower end of the company's recent quarterly delivery performance. Sales earlier last year were hampered by multiple factors, including public backlash surrounding Musk's role in the Trump administration and production halts linked to upgrades for the best-selling Model Y.

A vehicle transporter unloads Tesla Model Y vehicles at a Tesla store in Colma, California.

Analysts project that Tesla's sales will fall significantly below recent quarterly peaks—when the company delivered close to 500,000 vehicles in a single quarter.

Amid weakening global demand for electric vehicles, Tesla's slowing sales may become the new normal as the company increasingly shifts its focus toward artificial intelligence, autonomous driving, and robotics. Compounding the issue, the U.S. federal tax incentive for plug-in vehicles has expired. Additionally, Tesla is phasing out its lower-volume premium models, the Model S and Model X, further narrowing its aging product lineup even as competition intensifies worldwide.

"If they can demonstrate stability in their numbers—at least in terms of deliveries—without the tax credit, I think that would be a win," said Gene Munster, managing partner at Deepwater Asset Management.

Munster noted that investors will use this period to gauge demand in the absence of tax incentives.

While European sales remain subdued, they have stabilized early this year. The Chinese market has shown notable improvement, with Tesla's Shanghai factory reporting a 91% surge in February sales based on preliminary data from the China Passenger Car Association.

A touchscreen inside a Tesla electric vehicle at a Tesla store in Marseille, France.

Enthusiasm surrounding Musk's future business plans drove Tesla's stock to record highs in December, though some of those gains have retreated since the start of the year.

Investors are increasingly looking past vehicle sales figures, prioritizing instead Tesla's progress on projects such as autonomous taxis, the Cybercab, and the Optimus robot. As long as the electric vehicle business remains stable or achieves modest growth—providing financial support for Musk's AI ambitions—it will continue to hold value.

Garrett Nelson, senior vice president of equity research at CFRA, stated that he is focused on the company's ability to deliver on its ambitious product plans and timelines, while also monitoring Tesla's plans to increase capital expenditures.

"The focus isn't on deliveries but on the bigger picture—such as the Terafab announcement and this wave of spending expansion Tesla is undertaking," Nelson said. "Concerns over the spending surge are indeed weighing on market sentiment toward the company."