Barclays Report: Tesla Q3 Deliveries Expected at 475,000 Units, FSD Adoption Exceeding 55%

Written by: Rita

The market views Tesla as an AI company, yet its automotive delivery growth is underestimated. In a report released on September 18, 2026, Barclays forecasts Tesla’s Q3 deliveries at approximately 475,000 units, a 4% year-over-year decline but above the market consensus of 466,000 units. Barclays maintains a Neutral rating on Tesla with a price target of $370. The current price is $366.20, offering about 1.0% upside potential.

Barclays analyst Dan Levy noted in his report that Tesla’s fundamentals have been overshadowed by its AI initiatives (Robotaxi, Optimus), but two areas of its automotive business remain highly relevant. The adoption rate of FSD is becoming a dual driver of sales volume and profitability, while exports from the Shanghai factory are contributing incremental global sales. The firm believes these two factors support the assessment of stronger-than-expected deliveries in Q3.

Buyers are increasingly choosing Tesla because of FSD. In the second quarter, FSD penetration in North American deliveries exceeded 55%, significantly higher than the management’s previous guidance of 20% to 30%. During the second-quarter earnings call, management noted that FSD is a significant driver of demand in North America, with consumers specifically purchasing Tesla vehicles for its FSD capabilities. FSD is expected to continue driving U.S. sales in the third quarter, and Tesla’s autonomous driving efforts have received increased attention following the unveiling of the Cybercab in Austin.

U.S. third-quarter deliveries are expected to be approximately 165,000 units, an increase of about 5,000 units quarter-over-quarter but a decrease of 23,000 units year-over-year. The larger year-over-year decline is due to last year’s third quarter being a purchasing surge ahead of the expiration of the electric vehicle tax credit. Barclays believes that incremental buyers attracted by FSD partially offset the impact of the subsidy phase-out.

Barclays visited the Shanghai Gigafactory last week, reaffirming Tesla’s significant cost advantages in Shanghai. The bank believes that exports from Shanghai will account for at least 20% of Tesla’s global sales this year, with many previously overlooked markets—such as Australia, Colombia, and Asia outside China—now contributing key sales growth.

In July and August, Shanghai's wholesale volume reached 180,000 units, up 19% year-over-year, with exports rising 92% year-over-year. Tesla continues to prioritize exports to support demand in Europe, Asia (excluding China), and other global markets, particularly amid weak domestic demand in China. Exports have supported higher production, with output in July and August up 23% year-over-year. Barclays believes that the higher profit margins from Shanghai exports benefit Tesla, given China’s lower production costs.

Combined sales in Europe in July and August totaled approximately 21,000 units, a decrease of about 18,000 units month-over-month, representing a 46% decline. Deliveries in Europe for the third quarter are expected to total approximately 71,000 units, down about 21,000 units month-over-month but up about 8,000 units year-over-year. Barclays noted that the month-over-month decline was expected, as August is during the European summer holiday period, when car sales typically slow. The bank expects September deliveries to account for approximately 70% of the third-quarter total, higher than 57% in June of the second quarter and 63% in September of last year.

The year-over-year increase in Europe is expected to be around 8,000 units, significantly lower than the 36,000 units in Q2 and 23,000 units in Q1. Barclays believes that European sales continue to benefit from imported vehicles from Shanghai, which enhance Tesla’s profit margins due to their lower production costs in China.

Domestic retail sales in China remain weak, with exports becoming the primary source of growth. In July and August, China’s retail sales totaled 77,000 units, a 21% year-over-year decline, while wholesale sales reached 180,000 units, up 19% year-over-year, and exports surged 92% year-over-year. Third-quarter deliveries in China are expected to be approximately 137,000 units, up 9% quarter-over-quarter but down 19% year-over-year. Tesla continues to prioritize exports to meet demand in Europe, Asia (excluding China), and other global markets.

Barclays expects Tesla to focus on domestic sales in China in September, consistent with typical seasonal patterns at the end of the quarter. The bank forecasts approximately 60,000 deliveries in September, significantly higher than the average of 39,000 in July and August. September sales will be supported by additional incentives. At the beginning of September, Tesla began offering new discounts of RMB 10,000 and RMB 5,000 for inventory Model Y and Model 3 vehicles delivered before month-end, in addition to existing promotions such as paint, insurance, and financing subsidies.

Cost pressures and incentives constitute the main headwinds. Barclays expects third-quarter margins to remain flat or slightly decline compared to the second quarter, which posted a margin of 16.3% (excluding regulatory credit, including equity-based compensation). Unit sales declined slightly quarter-over-quarter, creating a modest headwind to fixed cost absorption. The regional mix is expected to be a headwind, with declines in Europe and Asia-Pacific, offset by an increase in China. Pricing and incentives are headwinds, with continued incremental incentives in China and financing incentives in the U.S. Raw materials are a headwind, as prices of key automotive metals—steel, aluminum, and copper—have risen; inflation in gold and silver also poses a headwind, as electric vehicles contain higher amounts of gold and silver than internal combustion engine vehicles.

FSD is a tailwind. In the second quarter, FSD penetration served as an unexpected tailwind to profitability, with management noting that FSD adoption exceeded 55% in North American deliveries. Barclays expects strong adoption in North America to continue in the third quarter, and FSD could also provide a tailwind in Europe, as Tesla received provisional approvals to launch FSD in multiple countries during the second quarter, with a vote on EU-wide FSD approval expected in October.

Barclays expects third-quarter production of approximately 480,000 vehicles, above the consensus of 477,000. Second-quarter production was 452,000 vehicles. The bank anticipates a sequential inventory increase of about 5,000 vehicles, partially replenishing the approximately 30,000-vehicle inventory decline in the second quarter. Tesla plans to increase production across all factories in 2026, with first-half production up 11% year-over-year and third-quarter production expected to rise 7% year-over-year.

Barclays expects energy storage deployments of approximately 15.6 GWh, representing a 25% year-over-year increase and a 16% quarter-over-quarter increase. Profit margins are forecast to improve from the approximately 20% level impacted by warranty adjustments in Q2 to the mid-to-high 20s, consistent with management’s long-term expectations.

Barclays maintains a neutral rating on Tesla with a price target of $370. The bank believes that strong Q3 deliveries will further validate that Tesla’s automotive growth has turned a positive inflection point, a trend that has become even more evident after Q2 deliveries significantly exceeded expectations. Management noted at the end of Q2 that Tesla closed the quarter with the largest order backlog since 2023, indicating further growth potential ahead. Barclays will monitor whether management continues to see strong demand in Q3.

FSD penetration rate and Shanghai exports are two independent pillars supporting Tesla’s automotive business, with the former validating demand and the latter validating cost advantages.

Disclaimer

This article is a compilation and interpretation by Chaoxiang Research of a third-party brokerage research report (Barclays, September 18, 2026), combined with publicly available market information. The ratings, price targets, earnings forecasts, and related judgments cited herein reflect the views of the brokerage's analysts and represent the position of their respective institution, not the views of Chaoxiang Research, nor do they constitute any investment advice.

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