William Blair maintained its Market-Perform rating on Tesla Motors (NASDAQ: TSLA) shares following the company's stronger-than-expected third-quarter delivery figures. The firm believes that vehicle deliveries came in well above market expectations, but that growth in the energy storage business is temporarily constrained by supply, and that Tesla's current valuation remains significantly higher than that of its technology-sector peers, which is why it did not move to a more positive rating.
Tesla delivered a total of 486,532 vehicles in the third quarter, roughly 5% above market expectations. The Model 3 and Model Y remained the absolute mainstays, while Model S and Model X production is gradually being reduced, and Cybertruck sales remain at a relatively low level. William Blair believes this data set shows that demand for Tesla's core models and its delivery execution remain resilient, and that at least in the short term the automotive business is performing better than the market had previously feared.
The energy storage business, however, put in a relatively weaker performance. Tesla deployed 13.7GWh of energy storage in the third quarter, essentially flat versus the prior quarter and about 14% below the consensus estimate. Rather than simply reading this as weak demand, William Blair attributes the slowdown in storage deployments mainly to supply constraints that have limited the pace of capacity ramp-up, not to any meaningful change in end-market demand. That distinction matters. If the problem stems mainly from supply, then the storage business still has a chance to reaccelerate as capacity is released; if demand itself has weakened, the growth thesis would need to be reassessed. William Blair expects the growth rate of Tesla's storage deployments to pick up again in subsequent periods.
Meanwhile, Tesla's Megapack recently entered Nvidia's DSX Ready program and has been incorporated into the ecosystem tied to AI data center infrastructure. William Blair sees this as further expanding the range of applications for Megapack in AI data center scenarios. Demand for power stability, energy storage, and backup power in AI data centers continues to grow, and if Megapack can participate more in this infrastructure buildout, the storage business could gain a new source of demand beyond traditional grid projects. As a result, William Blair is not pessimistic about Tesla's energy storage business: the current shortfall in deployments is more a capacity issue than a problem of orders and demand.
What is really holding the firm back from upgrading the rating is valuation. By William Blair's estimates, Tesla's current enterprise value is about 86 times its 2027 EBITDA, compared with an average of about 18 times for comparable technology-sector companies. In other words, the market has already assigned Tesla an extremely high growth premium. This means that even if vehicle deliveries and the energy storage business continue to improve, much of the long-term growth expectation is already reflected in the current share price. William Blair also flags that Tesla still faces competition from Chinese electric vehicle and energy storage companies, geopolitical risks stemming from its large exposure to the Chinese market, and key-person risk arising from the company's heavy reliance on CEO Elon Musk.
Therefore, the core logic behind William Blair's decision to maintain its Market-Perform rating this time can be summarized as follows: vehicle deliveries beat expectations, the demand thesis for energy storage remains intact, and AI data centers open up new application scenarios for Megapack, but these positive factors are still not enough to offset the risks posed by an extremely high valuation. In other words, William Blair is not questioning Tesla's growth story; it believes the market has already paid a very high price for that growth story.