Dan Ives Predicts Tesla’s Return to Growth with New Models
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Introduction: Ives Sees Tesla Poised for a Delivery Surge
In a bullish update, Wedbush analyst Dan Ives has released a fresh investor note suggesting Tesla may be on the brink of a sharp revival in deliveries. After nearly two years of growth stagnation, Ives argues that Tesla’s path to a renewed uptrend is now clearer, especially with the unveiling of more affordable models.
His timing is notable: the broader EV market is navigating a shift. U.S. federal tax credits have expired, consumer sentiment is under pressure, and competition is intensifying worldwide. In this environment, Ives’s optimism could mark a turning point for Tesla’s trajectory — not just in terms of delivery numbers, but also in the valuation narrative tied to technology and autonomy.
New Entry-Level Models: The Demand Lever
Launch and Positioning
On October 10, 2025, Tesla introduced new Standard variants of its Model 3 and Model Y, priced just under the $40,000 mark. The move is deliberate — designed to peel off budget-conscious buyers who may have previously considered less tech-forward EVs. Ives sees these new models as central to Tesla’s goal of hitting ~500,000 vehicles per quarter in the near term.
By lowering the barrier to entry, Tesla aims to stimulate latent demand, especially from consumers who hesitated because of cost or limited EV options at price points aligned with ICE (internal combustion engine) alternatives. Ives believes this may prompt upgrades too — nudging some buyers toward mid-tier or premium trims after entry-level adoption.
Risks and Market Reception
That said, not everyone is unreservedly enthusiastic. Some analysts have pushed back, arguing the anticipated incremental volume may come at a cost to margins. Indeed, in a separate note, Ives himself tempered expectations, signaling that the market’s reaction to the new models was “relatively disappointing.”
Still, the broader thesis is clear: to break free from a plateau, Tesla needed fresh volume drivers. These models serve as tactical instruments to reignite consumer interest.
Macro Tailwinds: EV Growth and Competitive Dynamics
To understand Tesla’s potential resurgence, it’s critical to place it in the context of global EV growth trends and intensifying competition.
Global Sales Surge
The electrification wave is still gaining steam. Globally, EV (BEV + PHEV) sales in June rose ~24% year-over-year, with strength in China and Europe offsetting a weaker U.S. showing.
In the first half of 2025, 9.1 million EVs were sold worldwide — a ~28% increase relative to H1 2024. China accounted for over half that volume (~5.5 million units), while Europe contributed ~2 million.
Industry forecasts suggest the momentum will continue: the IEA expects 2025 EV sales to exceed 20 million units, pushing plug-in vehicles to represent ~25% of global new car sales. Meanwhile, BloombergNEF anticipates a ~25% year-over-year increase in EV sales for the full year.
Competition: BYD and Chinese Makers Rising
Tesla’s challenge is not just volume — it’s beating increasingly capable rivals. In the first half of 2025, BYD sold nearly 1.9 million plug-in vehicles, capturing ~19.9% of global share and topping all brands. During that period, Tesla logged ~719,000 deliveries, a 13.1% decline and a fall in market share to ~7.5%.
Chinese automakers are constructing a formidable lead in the zero-emission vehicle domain. The ICCT reports that in recent years, China has delivered over 11 million EVs annually—more than half of the world total—and holds dominant positions in class coverage and market share among top EV manufacturers.
In Europe, Tesla also faces headwinds. Despite rising overall EV sales in the region, Tesla’s European volumes have declined for consecutive months. In May 2025, Tesla’s sales dropped ~27.9% year-over-year while Europe’s EV market expanded ~27%. The shift points to the intensifying pressure from lower-cost Chinese EVs, local OEMs, and changing customer expectations.
Unlocking the “AI Valuation” & $3 Trillion Ambition
Beyond vehicle sales, Ives is betting that Tesla’s real valuation upside lies in its developments in artificial intelligence, autonomy, and robotics. He argues that as FSD (Full Self-Driving) capabilities penetrate Tesla’s installed base, an “AI valuation” unlocks, making Tesla less a carmaker and more a platform company.
In his bullish scenario, Ives projects that Tesla could hit a $2 trillion market cap by early 2026 and extend toward $3 trillion by year-end, driven by scaling autonomous vehicle (AV) deployments and the rollout of the Cybercab robotaxi.
Signals from Tesla’s factories back this direction. The Cybercab has been spotted in test environments—test tracks in Fremont and crash-tested units in Austin suggest engineering progress is underway. Ives views the robotaxi as a “golden goose” that could transform Tesla’s business model from vehicle OEM to mobility services provider.
Bridging the Path to 600k+ Deliveries
Ives sees three key levers that Tesla must manage to reach—and maintain—quarterly volumes of ~500,000 to 600,000:
- Volume from new lower-cost models– These variants must offset declines or slow growth in higher-end versions.
- Global footprint expansion & local production– To reduce cost, tariffs, and logistics drag.
- Continuous AI/autonomy monetization– Margin expansion and valuation uplift will hinge on scaling software revenue, not just hardware.
This is a delicate balancing act: expanding volume without collapsing margins, while preserving Tesla’s premium technology cachet.
Risks & Counterarguments
Even as Ives lays out a bullish scenario, several headwinds could derail the path:
- Margin dilution risk: The new low-cost variants may compress Tesla’s margins, especially if aggressive incentives are needed to compete.
- Regulatory complexity: Autonomous vehicle deployment in multiple jurisdictions still faces regulatory risk, delaying monetization.
- Competitive pricing pressure: Chinese OEMs may continue undercutting on cost, eating into Tesla’s addressable share.
- Production scaling challenges: Logistics, battery supply, and parts sourcing must scale reliably without quality disruptions.
- Market sentiment volatility: Any misstep in deliveries, quality, or software updates could shake investor confidence.
Moreover, the U.S. EV landscape is showing signs of fatigue—EV penetration in new U.S. light-duty vehicle sales in Q1 fell to 9.6%, down from 10.9% in Q4 2024. Charging infrastructure expansion is also lagging: only one new public charger is being added per 42 new EVs.
Strategic Implications & What to Watch
Execution Focus
Ives’s thesis is compelling—but its success depends heavily on flawless execution. Tesla’s ability to produce, deliver, and support entry-level models at scale will be under intense scrutiny. Any friction—quality issues, logistics bottlenecks, software rollouts—could undercut momentum.
Shifts in Investor Narrative
If Tesla succeeds in delivering consistent volume growth while leveraging AI/autonomy as a monetizable pillar, it could shift investor perception. The stock might be revalued less as a carmaker and more as a technology/AI platform — a narrative Tesla has long hinted at but struggled to fully realize.
Competition as Co-accelerator
Rivals pushing EV affordability could paradoxically benefit Tesla by expanding overall market demand. As more consumers consider EVs (versus ICE), Tesla’s brand and charging network can act as differentiators in a larger addressable market.
l Key Milestones to Watch
- Tesla’s quarterly deliveries for Q4 2025 and early 2026
- Adoption rates of the new standard models vs. legacy models
- Progress and regulatory signals around the Cybercab/robotaxi projects
- Margins and software-as-a-service (SaaS) revenue trends tied to autonomy
- Competitive pricing moves by BYD, Volkswagen, Stellantis, etc.
- Global EV market growth rates, especially in China & Europe
Conclusion: Turning the Page
Dan Ives’s latest analysis lays out a bold, multi-dimensional vision for Tesla’s next chapter. Rather than relying solely on incremental hardware gains, he posits that affordability, scale, and autonomy must converge to reignite growth.
The introduction of sub-$40K models is a tactical move to reignite consumer interest—but the real prize, in Ives’s view, lies in unlocking Tesla’s future as an AI-driven mobility platform. Whether Tesla can execute across volume, margin, and autonomous deployment will determine if his $2–$3 trillion valuation path is more than just bullish speculation.
As competition tightens and EV adoption accelerates globally, the next several quarters will be pivotal. For Tesla, this might be the moment where growth returns — not just in units, but in vision.