Morgan Stanley Raises Tesla Q2 Delivery Forecast on Strong Europe and China Demand

Morgan Stanley has increased its second-quarter delivery forecast for Tesla Inc. (NASDAQ: TSLA), citing stronger-than-expected electric vehicle (EV) sales in Europe and China. The revised outlook reflects improving demand in key international markets, although the investment bank remains cautious about Tesla’s energy storage business despite maintaining its long-term price target.

The brokerage now expects Tesla to deliver approximately 413,000 vehicles during the second quarter, up significantly from its previous estimate of around 373,000 units. The updated projection also exceeds the broader Wall Street consensus of roughly 401,000 deliveries, highlighting growing confidence in the automaker’s recent sales performance.

Morgan Stanley said the upward revision was driven by encouraging registration and sales data collected throughout April and May. Europe emerged as the strongest contributor to the improved forecast, with vehicle registrations running well above year-earlier levels. The region also continued its recovery after a challenging start to 2025, marking another month of improving sales momentum.

China, another critical market for Tesla, also showed signs of renewed strength. Domestic vehicle sales rebounded in May compared with both the previous month and the same period last year, ending two consecutive months of annual declines. The improvement suggests consumer demand may be stabilizing following recent weakness.

In the United States, Tesla’s sales remained below year-ago levels through May. However, Morgan Stanley noted that regional trends still indicate deliveries are likely to exceed its earlier expectations, contributing to the higher global forecast.

Despite the stronger vehicle outlook, Morgan Stanley left its $415 price target unchanged. The firm continues to take a conservative stance on Tesla’s energy storage segment, forecasting second-quarter energy storage deployments of 11.8 gigawatt-hours (GWh), below the market consensus estimate of approximately 14.3 GWh.

The brokerage attributed its cautious outlook to project timing concerns after delays affected deployments during the first quarter. Nevertheless, it expects the business to accelerate in the second half of the year, forecasting full-year energy storage installations of around 55 GWh, broadly matching industry expectations.

The stronger delivery forecast also prompted Morgan Stanley to revise its financial projections. The bank raised its second-quarter adjusted EBITDA estimate by approximately 11% and modestly increased its full-year revenue and earnings forecasts. The improved outlook reflects expectations for higher vehicle deliveries and slightly stronger automotive profit margins.

Tesla shares responded positively to the analyst update. The stock gained 1.2% to close at $379.71 on Friday after reaching an intraday high of $387.80. Shares also edged higher in after-hours trading, adding further gains as investors reacted to the upgraded delivery forecast and improved earnings expectations.

Morgan Stanley’s latest assessment reinforces optimism surrounding Tesla’s core electric vehicle business while highlighting continued uncertainty in its rapidly expanding energy storage division. Investors will now closely monitor Tesla’s official second-quarter delivery results to determine whether the company can meet or exceed the brokerage’s upgraded expectations.