Tesla sales jump 25% in second quarter as Europe rebound revives EV maker

Tesla delivered a record 480,126 vehicles worldwide in the second quarter of 2026, up about 25% from a year earlier, in its first quarterly sales growth since the company's peak in 2023. The figure, reported on 2 July, comfortably beat Wall Street forecasts and pointed to a recovery in Europe that has eased fears the electric-car maker was heading for a third consecutive year of falling demand.

The result was Tesla's strongest second quarter on record and outstripped the average analyst estimate of about 403,000 to 406,000 vehicles by roughly 74,000 units, according to figures compiled by Reuters and the company. Deliveries were also 34% higher than in the first quarter, when Tesla shipped 358,023 vehicles, and up from 384,122 in the same period of 2025.

The rebound follows a bruising stretch in which slumping sales, an ageing line-up and a consumer backlash tied to chief executive Elon Musk's politics had knocked Tesla off balance in its two largest export markets. Even so, investors were unmoved: Tesla shares fell about 7% on the day, a "sell-the-news" reaction after the stock had risen around 12% earlier in the week.

A record quarter, well above forecasts

Tesla produced 451,758 vehicles during the quarter and delivered 480,126. The mass-market Model 3 sedan and Model Y sport-utility vehicle made up 467,762 of those deliveries, or about 97% of the total, with the Model S, Model X and Cybertruck accounting for the remaining 12,364. The company also deployed 13.5 gigawatt-hours of energy storage, up from 9.6 GWh a year earlier.

"I think the huge growth in Europe is the key driver for Tesla right now. U.S. sales still appear to be down, albeit less than the broader U.S. EV decline, while China is seeing small growth," said Seth Goldstein, senior equity analyst at Morningstar.

Goldstein, who had expected a third straight annual decline, said the quarter changed his view. "I think it would be very hard to see a decline for the full year at this point," he told Reuters. Tesla will report full second-quarter financial results, including profit margins that have been squeezed by price cuts, after the market closes on 22 July.

Europe leads the rebound

The clearest turnaround came in Europe, where Tesla had lost significant ground in 2025 as registrations across the European Union fell by nearly 38%. Industry data cited by Reuters showed several months of renewed year-on-year growth in the first half of 2026, with regional registrations in May rising to 28,610, more than double the year-earlier level, and roughly 118,000 vehicles registered in the year to that point.

Analysts and the company attribute the recovery to a mix of product and market forces:

the refreshed Model Y, known internally as "Juniper", and lower-priced versions of the Model 3 and Model Y;

higher fuel prices in the first half of the year, linked in part to conflict in the Middle East, which pushed drivers toward electric cars;

government purchase incentives and the faster electrification of corporate fleets in several European countries;

an easing of the consumer backlash over Musk's interventions in European and US politics.

"Their pricing and their products are helping the buyers overcome any issues they might have with Elon Musk personally," said Sam Fiorani, vice-president at AutoForecast Solutions.

China grows, but BYD stays ahead

China, Tesla's second-largest market and the base for much of its export production, also contributed to the rebound. Reuters, citing wholesale data, put Tesla's China deliveries at 254,551 for the quarter, up 32.8%, helped by the updated Model Y and cheaper local variants.

The gains, however, unfolded against relentless competition from domestic rivals. BYD, China's largest electric-vehicle maker, delivered 557,090 fully battery-electric cars in the same quarter, keeping it ahead of Tesla in global all-electric sales. The gap between the two narrowed to about 77,000 vehicles, down from more than 220,000 a year earlier — a reminder that Tesla's recovery is occurring in a market where Chinese manufacturers now set the pace on price. For the whole of 2025, BYD outsold Tesla in battery-electric vehicles by more than 600,000 units.

What the numbers signal

Tesla's quarter is being read as a bellwether for a European electric-car market that had stalled, and as evidence that price cuts and a modernised range can still move metal even amid intense Chinese competition. North America remains the weak spot: sales there stayed under pressure after the expiry of the $7,500 US federal tax credit for electric vehicles, and one brokerage estimated Tesla's US deliveries fell by at least 10% in the quarter.

For investors, the delivery beat reopened the question of whether the rebound is durable or a one-off lift from incentives and fuel prices — and how much of Tesla's valuation now rests on ventures beyond car-making.

"Investors are hyped about the bounce-back, but the big money is still waiting to see if Tesla can actually deliver on Elon Musk's promises around AI, robotaxis, and self-driving tech," said David Wagner, head of equity at Aptus Capital Advisors. The 22 July results, and any guidance on margins and its planned lower-cost models, are likely to determine whether the second-quarter surge marks a genuine turning point or a pause in a longer slide.