Tesla (TSLA) shares ended the holiday-shortened week with a 2.3% gain, buoyed by news that Estonia has approved the company's Full Self-Driving (FSD) system for use on its roads. The stock closed Wednesday at $435.79, down 1.43% on the day but still above the prior Friday's close. Investors will have to wait until Monday's regular trading session to fully digest the Estonia development, as U.S. cash markets were closed on Sunday.
Estonia's Approval and FSD Classification
On Friday, Estonia's transport authority classified Tesla's FSD as a Level 2 system, meaning the driver remains fully responsible for vehicle operation at all times. Tesla announced the approval on X, stating that FSD Supervised rollout in Estonia will begin soon. This marks another regulatory win for Tesla in Europe, following similar approvals in other markets.
European Sales Momentum
Tesla's European registrations surged 46.5% in April to 10,654 vehicles, according to data from the European Automobile Manufacturers' Association cited by Reuters. This marks the third consecutive month of gains in the region. However, Chinese rival BYD led the month with 27,008 registrations, a 114.5% increase year-over-year.
Mixed Demand Signals
Despite the positive European data, Tesla's core automotive business faces headwinds. First-quarter deliveries totaled 358,023 vehicles, missing Wall Street targets, while production exceeded deliveries by 50,363 units, leaving unsold inventory. The company has been pushing price discipline, raising prices on certain Model Y trims in the U.S. this month by up to $1,000.
Capital Spending and Autonomous Driving Investment
CEO Elon Musk has emphasized that Tesla is substantially increasing investment in future technologies, including autonomous driving. CFO Vaibhav Taneja described the current period as a very big capital-investment phase, with spending directed toward plants, equipment, and long-term assets. Investors are betting on the promise of AI-driven revenue and profit, though most of that revenue has yet to materialize.
Safety Concerns and Analyst Views
A Reuters special report highlighted concerns from former Tesla data labelers and traffic-safety experts about the safety of FSD and how Tesla assesses its performance. Alphabet's Waymo is viewed as having a more rigorous approach to comparing crash data. Morningstar analyst Seth Goldstein has warned of a potential third straight year of deliveries decline in 2026, while Gene Munster of Deepwater Asset Management noted that a small decline could be acceptable, but a quicker decline would be problematic.
Outlook for the Week Ahead
With no major events on the calendar, traders will focus on Monday's open to gauge whether the Estonia approval signals a wider FSD rollout across Europe or remains a limited step forward for a system that is still not fully autonomous. The broader market context remains mixed, as Tesla balances regulatory wins with ongoing demand challenges and heavy capital spending.
