Deutsche Bank: Tesla – Model S/X Production Cuts and Soft EV Demand Drag Global Deliveries
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Deutsche Bank notes that Tesla delivered 358,023 vehicles in the first quarter of 2026, falling slightly below the consensus estimate of 365,600 units. This shortfall was primarily driven by intentional production cuts of the Model S/X and generally soft global electric vehicle demand, although European consumer sentiment appears to have bottomed.
Energy storage deployments reached only 8.8 GWh, substantially missing the expected 14.4 GWh due to uneven order delivery, but sequential improvement is anticipated. First-quarter revenue is projected at $20.7 billion, declining sequentially but increasing year-over-year. The automotive gross margin, excluding regulatory credits, is expected at 14.7%, down from 17.9% in the fourth quarter of 2025, impacted by lower volumes and the elimination of the FSD prepaid option.
Analysts tested the Robotaxi in Austin, noting impressive technology despite suboptimal routing logic. The Robotaxi remains in the validation stage. Expansion to additional cities, including Dallas, Houston, Miami, and Las Vegas, is expected to be confirmed during the upcoming earnings call.
Tesla confirmed its Terafab semiconductor vertical integration project, targeting 1 TW capacity with an initial $20-$25 billion investment for a 2nm pilot facility at Giga Texas. Intel has joined the project to optimize logic chip manufacturing. Total capital expenditure commitments for the year exceed $20 billion. Deutsche Bank maintains a Buy rating but slightly lowered the target price from $480 to $465 based on Physical AI success and model fine-tuning.