Investor's Corner
Concerns about Tesla’s (TSLA) alleged ‘demand problem’ are likely overblown
The past few months have not been kind to Tesla stock (NASDAQ:TSLA). Following the company’s lower-than-expected production and delivery figures from the first quarter, the negative narrative surrounding Tesla has gone on overdrive. At the forefront of this is a thesis that the electric car maker’s critics have been pushing: Tesla has a demand problem.
This particular point has spread like wildfire, particularly over the past few weeks. Analysts that recently downgraded TSLA stock would reference weak demand for the Model 3, and bears would echo the same assumption during segments in mainstream media. While this narrative is compelling in the way that it appears to be a foreshadowing of Tesla’s eventual demise, the demand problem thesis is at best inaccurate and at worst flat-out wrong, simply because one can’t base a thesis in one data point.
TSLA investor @Incentives101, an economist with a background in macro research, notes that there is a considerable misconception surrounding Tesla’s Q1 results and how it relates to the demand for the company’s electric cars. In a conversation with Teslarati, the investor explained that while it is easy to make assumptions based on Tesla’s Q1 2019 figures, there is simply not enough data to accurately and responsibly forecast Model 3 (and in extension, Model S and X) demand. Tesla’s Q1 2019 data is nevertheless useful, as it reveals a series of factors that could shed light on what is happening to the electric car maker.
Shocks, Backlogs, and Demand
The economist notes that demand shocks could be transitory or permanent. Taxes, for example, normally have a permanent effect and natural disasters have a transitory one. But these shocks have different effects over time depending on whether a shock is sudden or expected. Understanding how demand normally reacts to these shocks is very important, as it provides clues at what could be expected to make informed assumptions about Q1. When a shock such as a federal tax credit reduction comes, for example, its effect happens in three stages — given that consumers knew it was coming. Before the shock hits, demand generally increases (pulling demand), followed by a period where demand decreases by more than what could be considered a new equilibrium. Following these is another period where demand increases to reach a new equilibrium. Q1 most likely was the worst part of the second stage.
The backlog of Model 3 reservations was primarily used as a point against Tesla by critics, with an assumption suggesting that there will be no demand for the vehicle after the company clears out its initial batch of reservations. The economist argued that while Tesla’s backlog is widely believed to be a factor impacting demand, such a factor would likely not be relevant in the bigger picture. “Given the characteristics of auto demand (it recycles constantly, consumers preferences are well understood, and trends are clear) a ‘backlog’ has the same effect as a natural disaster if you really want to compare it to something. If the backlog happens at the same time as a tax shock or other shocks, it just exacerbates the move. The duration of the shock could be discussed, but in the end, the effect of the backlog is just irrelevant,” the investor said.
Tesla faced a number of shocks in the US auto market in recent months, and these could be translated into inaccurate assumptions. Among these are negative shocks such as the reduced federal tax credit, the “end” of the Model 3 reservation backlog, seasonality, and supply; as well as positive shocks like price reductions on the company’s vehicle lineup.
“There are some main conclusions that one can infer from the data: 1) There isn’t information available to know what the initial equilibrium was. The exponential shape of the curve gives no reference whatsoever to know this. Comparing Model S/X vs. Model 3, is easy to see that S/X had a stable path which would make it easier to measure the impact of these type of shocks; 2) Over time, the shock will be (almost) totally explained by the reduction in supply; 3) Shocks were expected, and price adjustments should more than cancel any negative permanent shock that taxes would have; and 4) Tesla had really bad luck with all these things happening at the same time,” the economist remarked.
Consumer Preferences
Based on these data, one can infer that the primary constraint that Tesla is facing is not demand, but supply. Demand for the company’s vehicles is not exclusive to the United States auto market. It is global, and in this sense, there is simply no indication that global supply for Tesla’s electric cars is already meeting global demand. The investor noted that the effect of the “backlog” argument in global markets would likely be marginal and transitory, and just as demand is not static, supply and prices have not been either.
Ultimately, the most significant factor that would affect the demand for Tesla’s vehicles is consumer preferences. In recent years, consumer preferences are changing in favor of smart devices, and this cascades into the auto industry. Tesla’s electric cars, which are arguably the most tech-focused consumer vehicles on the road today, are a perfect fit for this changing landscape.
According to the economist, “Consumer preferences and regulation actually affect demand. Prices technically don’t affect demand — just the quantity demanded — and the trend shows that it will have a multiplier effect. It’s always important to ask the correct questions, and the question today is not what are they doing to ‘fix’ a transitory shock? Or where’s demand? The question is, how will you increase supply?”
Alleged ‘Cannibalization’ of the Model S and X by the Model 3
In terms of the alleged cannibalization of Model S and X sales by the Model 3, the investor notes that there is no reason, at least at present, to believe that cannibalization is actually happening. Tesla Model 3 sales increased while Model S and X remained in their path, and as sales of the flagship sedan and SUV decreased, Model 3 sales in the US decreased as well.
“Even if you disaggregate data to try to find signs of cannibalization, there’s still no proof. There’s only one market — Norway — that is big enough, that has reliable data and didn’t face any distortions (tax or subsidy), that could give us any insight about cannibalization. Without further information, it would seem that there was significant cannibalization. The only problem is that Tesla distorted the market by eliminating the most popular Model S and X variant (75kWh), which was, on average 70%+ of sales. It is simply impossible to know which effect (the Model 3’s introduction or the 75kWh variant’s elimination) had the biggest impact, or even measure them in any way. And even then, one market may not be enough to prove it,” the investor stated.
Ultimately, the continuing phase-out period of the federal tax credit in the US would likely affect Model S and X sales in the country. But similar to the Model 3, these effects will likely be transitory and not permanent, especially given that prices have changed accordingly, given that the vehicles have better value per dollar. As with the Model 3, the sharp decrease in Model S and X sales in Q1 2019 could be explained by supply changes in its totality. Thus, demand should return to its previous path after a short period of time.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
Investor's Corner
SpaceX reveals how its 1 Million AI satellite network will work and prevent space collisions
SpaceX reveals plans for one million Starmind AI satellites and calls out operators hiding maneuvers.
SpaceX has put the largest satellite count it has ever published into writing, and it says that plan only works if every other operator in orbit starts sharing what it knows.
In a new Space Safety page highlighted Tuesday morning by Sawyer Merritt on X, SpaceX said it “plans to operate up to 100,000 Starlink satellites and up to 1 million Starmind AI satellites to meet the growing demand for broadband and supercompute.” Starlink has a little over 11,000 satellites in orbit today, so the target alone implies roughly a ninefold expansion of the broadband network.
Starmind is SpaceX’s orbital AI compute constellation. Elon Musk confirmed the Starmind name in June after an xAI trademark filing surfaced, and in August SpaceX said it was working with Nvidia on the compute payload. The FCC accepted the filing for up to one million satellites back in February.
FCC accepts SpaceX filing for 1 million orbital data center plan
SpaceX also released a new render of what a full Starmind constellation could look like. Alongside it, SpaceX VP Michael Nicolls explained why the satellites will not operate on their own. “We need to operate clusters of satellites in tight formation to get enough coherent compute to run AI models efficiently,” Nicolls said. “A cluster will be 10-ish satellites connected with 10 terabits or so of bandwidth between them, and interconnected to the broader constellation.”
That is the most specific detail SpaceX has given on how Starmind will be built. Instead of a million independent servers, the network would work as tightly packed groups of about 10 satellites acting as one compute unit, with Starlink’s laser links carrying results back to Earth.
There is a bright and exciting future for humanity ahead – and space is fundamental to that future.
To achieve this, space safety must be done right. We encourage every operator to not only share ephemeris data proactively the same way Starlink already does, but to also adopt the high standards of space safety that SpaceX and Starlink use every day → https://t.co/QizAkQZvEm
— Starlink (@Starlink) October 6, 2026
Packing satellites that close together, at that scale, makes collision avoidance the central problem, and most of the Space Safety page is aimed at other operators. SpaceX said Starlink encountered collision risks with about 650 unique maneuvering third party satellites in 2026, and only about half of them shared data. Over six months, Starlink recorded roughly 164,000 more collision risks where the closest approach came within four hours of an unannounced maneuver.
Some operators keep maneuver plans private over proprietary concerns, while others cannot get government permission to share them. SpaceX called those policies “counterproductive,” saying they “largely only serve to create preventable collision risk between satellites.” Starlink is also offering a free ephemeris sharing and screening platform that returns risk results within a minute, backed by its Stargaze network of 30,000 optical sensors.
The push comes as the Starmind application draws opposition from astronomers and environmental groups. In a September filing with the FCC, SpaceX said each Starmind satellite could weigh up to 4,000 kg, nearly seven times the mass of a Starlink V2 Mini. Musk has brushed off crowding concerns before, telling viewers in June that “space is enormous” and that SpaceX already knows how to run very large constellations safely.
SpaceX’s Starmind page says its Gigasat factory in Bastrop, Texas, is designed to produce AI satellites at scale, with deployment of thousands of units starting as soon as late 2027.
Tesla (NASDAQ: TSLA) reported strong delivery figures that beat Wall Street guesses, and they were revealed alongside the company’s second-best quarter in terms of energy deployments ever.
Tesla announced this morning that it delivered 486,532 cars in Q3, while producing 464,391, exceeding analyst consensus, which sat around 462,000 units.
Meanwhile, Tesla reported 13.7 GWh of energy storage deployed for the quarter. That’s the second-best quarter Tesla has ever reported on that side of things.
🚨 Tesla delivered 486,532 vehicles in Q3, beating expectations at 464,391.
Big Q from the Tesla team, also 13.7 GWh of energy was deployed. pic.twitter.com/olioLWgG7a
— TESLARATI (@Teslarati) October 2, 2026
Vehicle Deliveries
Deliveries were strong, and it was another quarter when Tesla had the opportunity to outshine the Wall Street pundits who are quick to criticize and slow to give credit. Tesla saw a slight decrease in deliveries compared to Q3 2025, but Tesla still had the $7,500 EV Tax Credit to use to help incentivize consumers to pick an EV.
A small decrease of 2.1 percent is pretty telling because it shows Tesla does not need massive federal credits to convince consumers to purchase its vehicles.
It was also the company’s third-best performance all-time in terms of deliveries, trailing that of Q3 2025 with 497,099 deliveries and Q4 2024, when the company handed over 495,570 cars.
We reported several days ago that Tesla Showrooms across the United States were completely bare of inventory or unclaimed units. Many locations also removed Demo Drive units, which had been bought by customers looking to take delivery sooner.
Tesla showrooms picked clean ahead of Q3 end as demand looks strong
Energy Generation
Tesla’s Energy Generation performance in Q3 was also very strong, as the company deployed 13.7 GWh of energy storage over the past three months. The only quarter when Tesla reported stronger energy deployment figures was Q4 2025, when 14.2 GWh of energy storage was deployed.
Tesla’s Q3 performance in energy generation has continued to grow each quarter, with the company increasing its deployments by ten-fold since Q3 2021, when just 1.3 GWh was deployed.
It is also nearly double what it was in Q3 2024, when the company reported 6.9 GWh. This is one of Tesla’s quickest-growing divisions, and it flies under the radar with fans and analysts, as many are focused on self-driving or the vehicles themselves.
Tesla Stock
Shares rose 5.07 percent to $372.06 at just after 10 a.m. on the East Coast. This is a rarity for Tesla after a strong delivery report, as positive news usually brings the stock down. Many quarters with extremely robust delivery reports have not been as kind to the Teslanaires of the world.
Elon Musk
Elon Musk and Trump are closer than ever, and Tesla could be the big winner
Elon Musk sat beside Trump as AI leaders signed a voluntary White House safety accord.
Elon Musk had the seat right next to President Donald Trump on Tuesday as the White House hosted the leaders of America’s biggest artificial intelligence companies for a lunch that ended with a voluntary industry accord on AI safety.
A seating chart Trump posted on Truth Social placed Musk at the president’s left in the East Room, with Nvidia CEO Jensen Huang on his right, according to an Associated Press reporter. Anthropic CEO Dario Amodei, OpenAI President Greg Brockman, Meta’s Mark Zuckerberg, Google’s Sundar Pichai, Microsoft’s Satya Nadella and Amazon founder Jeff Bezos also attended, along with Vice President JD Vance and House Speaker Mike Johnson.
🚨 Elon Musk is currently speaking to the media alongside President Trump after a meeting with AI Leaders in Washington today
Trump says AI is now being called “Super Intelligence” or SI pic.twitter.com/woJJqUVP9B
— TESLARATI (@Teslarati) September 29, 2026
After the lunch, Trump told reporters outside the West Wing that the executives had signed “The White House Accord on Superintelligence: A Joint Commitment on Frontier SI Responsibilities.” Johnson described it as a voluntary statement of principles built on “robust internal controls and layers of internal and external review,” while Zuckerberg said company boards would independently review reports from outside auditors. Trump called the document “morally binding,” said he would name a new AI czar within days, and signed an executive order formally renaming artificial intelligence “super intelligence,” CNBC reported.
Musk was not in the room for Tesla alone. Since SpaceX absorbed xAI, he runs the company behind Grok and one of the largest AI training operations anywhere. On September 25, he said another 220,000 Nvidia GB300 chips would come online at Colossus 2 within a week, with more expected in November and December.
“I think it is worth highlighting the positive benefits of A.I. … S.I., pardon me.”
“Thank you.”@elonmusk catches his own slip after calling the technology “A.I.” while speaking alongside President Trump and other tech leaders, quickly correcting himself to “super… pic.twitter.com/fH7CFileNb
— Fox News (@FoxNews) September 29, 2026
SpaceX confirms third massive compute deal at Colossus data center
Musk also used the trip to restate his energy ambitions. “SpaceX is aiming together with Tesla to do 200 gigawatts of solar production per year,” he said at an event in Washington. It is the same combined target he laid out that feeds directly into Terafab, the Tesla and SpaceX chip venture that will need enormous amounts of power.
The showing between Musk and Trump has come a long way, since the two had the very public split in mid 2025 after Musk opposed the “Big Beautiful Bill” and left DOGE. They reconciled at Charlie Kirk’s memorial that September, and Trump later called their relationship “good”. Since then, Musk has joined Trump’s China delegation in May and attended last week’s White House state dinner for Chinese President Xi Jinping.
For Tesla, that access to government official could pay dividends. As Teslarati noted in January, federal autonomy rules, NHTSA oversight and a single national standard for driverless vehicles all run through an administration Musk can more easily reach directly as Tesla works to scale Robotaxi and Cybercab beyond Texas.
Tesla Model 3 and Model Y can now do what only Cybertruck could
Tesla ships ‘spooky’ Halloween Mode with creepy and fun features
