Tesla Stock Rises. Why Investors Are Shrugging Off Another Drop in European Sales.

Coming into Tuesday trading, Tesla stock was up 12% year to date and 72% over the past 12 months. (Photo by INA FASSBENDER/AFP via Getty Images)

Key Points

• Tesla’s September sales in the EU dropped 18.6% year over year to 25,656 vehicles, despite broader EV market gains.
• Investors are currently prioritizing Tesla’s AI ventures, such as robotaxis and humanoid robots, over its automotive sales.
• Tesla’s stock rose 4.3% on Monday due to easing U.S.-China trade tensions, as China accounts for over 20% of its sales.

Tesla stock rose early Tuesday, despite more disappointing European sales data. Investors’ focus is elsewhere these days.

Shares of the electric vehicle maker were up 0.9% at $456.66, while S&P 500 and Dow Jones Industrial Average futures were flat and up 0.3%, respectively.

Tesla’s September sales in the European Union amounted to 25,656 vehicles, down 18.6% year over year, according to the European Automobile Manufacturers’ Association. Tesla sales in the broader European region were 39,837 vehicles, down 10.5%.

The drop came despite broader gains for electric cars in September. All-electric vehicle sales rose 20% year-over-year in the EU to 167,586 vehicles. Sales in the broader region rose 21.9% to 260,256  vehicles.

Tesla is facing more competition in Europe. BYD’s EU sales in September were 13,221 vehicles, up 272% year over year. Its European sales were 24,963 vehicles, up almost 400% year over year.

Tesla’s stock rising on a European sales dip isn’t all that surprising. For starters, Tesla already reported global third-quarter sales. It delivered almost 500,000 vehicles, a record for the company. Sales in the U.S., however, were boosted by buyers rushing to beat the expiration of the $7,500 federal EV purchase tax credit.

EV sales accounted for almost 12% of all new U.S. car sales in September, a record according to data provider Cox Automotive.

And while September was tough for Tesla in Europe, its rate of decline is slowing down. September results left Tesla sales off 39% year to date in the EU and off 29% year to date in the European region.

What’s more, investors simply haven’t been all that focused on Tesla’s car business lately. They are thinking about Tesla’s AI opportunities, linked to self-driving robotaxis and humanoid robots.

Coming into Tuesday trading, Tesla stock was up 3% since the company reported weaker-than-expected third-quarter operating profit of about $1.6 billion, down 40% year over year.

Shares jumped 4.3% on Monday as trade tensions with China decreased. Over the weekend, negotiators developed a framework for a U.S.-Chinese trade deal that Treasury Secretary Scott Bessent said could form the basis for discussion between President Trump and Chinese President Xi when they meet later this week.

Tesla stock tends to get a little extra boost when China-related news is good. The company does a lot of business there: Sales in China accounted for more than 20% of 2024 sales. Easing tensions between the U.S. and China reduces the risk that the auto maker gets caught in the middle of a trade war.

Monday’s move left Tesla stock 12% year to date and up 72% over the past 12 months.

Write to Al Root at allen.root@barrons.com