Tesla Grew Sales in Europe for the First Time in a Year. Is the Automaker's Stock Set to Soar in 2026?
Key Points
A long-term slump in a major EV market was finally snapped.
The year-earlier comparison comes with a critical footnote.
Tesla’s overall EV business continues to face strong headwinds, undermining any argument for immediately buying the stock.
A ray of hope is finally peaking through the dark clouds that have been lingering over Tesla's (NASDAQ: TSLA) European business for a while now. Namely, for the first time since December 2024, the European Automobile Manufacturers Association reports a year-over-year increase in the number of new registrations of Tesla-made vehicles. All told, the American company sold 17,664 vehicles in Europe last month, up nearly 12% from February 2024.
Obviously, all big trends start out as small ones, so this small step could be the first step in a positive direction. Anyone viewing this news as a reason to step into beaten-down Tesla shares, however, might want to hold off at least a little while longer. There's some important context missing from the headline.
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The rest of the story
Yes, Tesla made some much-needed progress in Europe last month. That bar was set rather low, though. Due to a retooling shutdown at multiple production facilities in early 2025, Tesla's sales in Europe plunged 40% year over year in February of last year, to only 16,888 automobiles. Simply having these factories up and running again a year later made a world of positive difference this time around. Look for a similar year-over-year benefit in the March 2026 numbers as well.
Perhaps the greater piece of context dialing back the net upside of Tesla's seemingly good news regarding its business in Europe, however, is that it's still not keeping pace with relatively new top EV rival BYD Company (OTC: BYDDY). As much as Tesla has grown its electric vehicle business in this market, China's BYD once again outsold Tesla in Europe last month with its 17,954 registrations, reclaiming a lead the two EV giants have been regularly swapping since the middle of last year. Moreover, BYD's longer-term growth trajectory in this important market remains positive, while Tesla's continues to deteriorate.
And for what it's worth, although Tesla's total unit sales in China have been growing in step with the country's rapidly growing electric vehicle market, it's been steadily losing market share -- mostly to newer EV brands -- within China since 2023.
Image source: Getty Images.
It's holding up slightly better within the United States, but is still broadly losing ground here. Although Tesla did gain domestic market share in the final quarter of last year, it made those gains in a rapidly shrinking EV market. Numbers from Cox Automotive say Tesla's unit sales in the U.S. fell 15% year over year to 138,000 automobiles in Q4 of 2025, trailing the 36% decline in overall electric vehicle sales within the U.S. for that three-month stretch.
Not enough -- at least not yet
None of this is to suggest that Tesla can't turn things around here or abroad, nor is it to suggest that the domestic EV business is on its deathbed. Things can and do change.
Last month's strong sales improvement in Europe, however, is far from being enough evidence of positive change on its own to justify taking a position in Tesla shares right now. The fact that the stock barely even budged on the news indicates most of the market feels the same way. The world is largely waiting to see what happens with its robotaxi and AI robotics businesses, but those are initiatives that won't start mattering until well after 2026.
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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends BYD Company. The Motley Fool has a disclosure policy.
