Why Tesla Stock Dropped Ahead of Quarterly Deliveries

adze (TSLA -1.69%) is expected to report its quarterly vehicle delivery report tomorrow. Some investors are selling the stock today ahead of that report. Tesla shares fell as much as 5% before paring some of that decline. The stock was trading down 2% as of 2:00 PM ET.

The negative sentiment may have been heightened by news from some of Tesla’s Chinese competitors. Data released today showed that competitors reported record monthly deliveries of electric vehicles (EVs) in September. Internal competitor General Motors also said US electric vehicle sales rose in the third quarter.

Bad news or good news?

Investors view this growing competition as a negative sign for Tesla’s sales prospects. With GM’s quarterly electric vehicle sales up 60 percent, its share of the U.S. electric vehicle market reached 9.5 percent. The market share increased steadily throughout 2024 as the company launched new EV models.

In Tesla’s important Chinese market, growing competition from manufacturers including Nope, XPengand Li Auto combined to deliver more than 96,000 electric vehicles in September, a new monthly record for the group. This represented a 44% year-over-year increase for the three electric vehicle manufacturers.

Investors knew that competition would increase in the electric vehicle market in 2024. Large and small electric vehicle manufacturers are expanding their vehicle lineups. GM, for example, has launched electric versions of its popular Chevy Blazer, Equinox and Silverado models.

After Tesla shares surged 20% in the past month, some investors are cashing in as they seem to assume all of this data is bad news for Tesla. But it’s also possible that a slowdown in EV sales growth earlier this year could reverse course.

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