Tesla shares extended their rally on Thursday, closing up 0.4% at $442.10 and notching a sixth consecutive session of gains. The stock traded within a range of $432.66 to $443.95, with the company's market capitalization hovering around $1.56 trillion. The upward momentum came as investors focused on a sharp recovery in European vehicle registrations, overshadowing persistent concerns about the safety and readiness of Tesla's Full Self-Driving (FSD) system.
European Sales Rebound Fuels Optimism
New vehicle registrations for Tesla in the European Union, United Kingdom, and EFTA countries jumped 46.5% year-over-year in April, reaching 10,654 units, according to data compiled by Reuters. This marks a significant turnaround for the automaker, which had faced headwinds in the region due to CEO Elon Musk's political controversies and intensifying competition. The rebound provides fresh ammunition for bullish investors who have been watching for signs of stabilization in Tesla's delivery numbers.
Despite Tesla's improvement, Chinese rival BYD continued to dominate the European market, more than doubling its registrations to 27,008 vehicles in April. The broader electric vehicle landscape remains fiercely competitive, with battery-electric vehicles capturing 19.7% of new EU registrations in the first four months of 2026, up from 15.3% in the same period last year, according to the European Automobile Manufacturers' Association (ACEA).
Production Outpaces Deliveries, Inventory Builds
Earlier this month, Tesla reported first-quarter production of over 408,000 vehicles, while deliveries came in at roughly 358,000 units. That gap of about 50,000 vehicles underscores a growing inventory challenge, as output continues to exceed customer demand. The mismatch has raised questions about whether the European sales bounce is sustainable or merely a one-month anomaly.
While stronger European numbers bolster the automotive side of Tesla's business, the stock's valuation remains heavily tied to expectations around high-margin ventures such as FSD, robotaxis, and robotics. The company's FSD (Supervised) system, which costs $99 per month in the United States, is marketed as a driver-assist feature that requires constant driver attention and is not fully autonomous.
Fresh Doubts Over Full Self-Driving Readiness
A Reuters report published Thursday highlighted renewed skepticism from former Tesla employees and safety experts regarding the readiness of Tesla's FSD technology and the company's reporting of safety data. Phil Koopman, an engineering professor at Carnegie Mellon University, cautioned that comparing new Teslas to older vehicles can be misleading. "Any new car is dramatically safer than a 12-year-old car," Koopman told Reuters, emphasizing the need for apples-to-apples comparisons.
The report also drew a contrast with Waymo, Alphabet's autonomous vehicle unit, which operates fully driverless cars in certain areas. John Scanlon, a Waymo safety researcher, stressed the importance of specific research questions and conclusions when evaluating autonomous driving safety. Waymo's approach offers a clearer benchmark against traditional human-driven vehicles under similar conditions.
Elon Musk has previously stated that Tesla would review safety data before allowing drivers to "text and drive, essentially," a capability the company has not yet approved. Tesla did not respond to Reuters' detailed questions for the story.
Market Reaction and Broader Context
Tesla shares showed little reaction to the safety report, suggesting the market did not view it as a near-term earnings catalyst. Instead, trading activity pointed to investors monitoring signs of sales stabilization, potential international expansion of FSD, and the broader appetite for artificial intelligence-related equities. The S&P 500 and Nasdaq both closed at record highs, supported by easing inflation concerns and optimism over a possible extension of the U.S.-Iran ceasefire.
"Traders are on a hair trigger with the back-and-forth on deal news," said Jamie Cox, managing partner at Harris Financial Group, in comments to Reuters.
Risk Factors and Outlook
Significant risks remain for Tesla. If regulators impose stricter oversight, new safety data undermines FSD's credibility, or adoption fails to materialize, the premium valuation tied to autonomous driving could erode. While a recovery in Europe may boost near-term delivery figures, it alone does not validate the autonomy narrative, especially as BYD gains market share and Waymo maintains its lead in driverless safety comparisons.
The stock retains short-term momentum, but the underlying business case remains under scrutiny. Investors will be watching closely for sustained sales growth and tangible progress on FSD deployment beyond the U.S. market.
