Tesla stock TSLA fell 3% on Tuesday, giving back part of its 5.5% gain from the previous session as investors reassessed the company’s robo-taxi prospects and digested mixed vehicle registration data from Europe.
Tesla shares were down 3.1% during Tuesday’s session, compared with declines of about 0.5% for both the S&P 500 and Dow Jones Industrial Average.
The stock’s Monday rally was widely linked to renewed optimism around Tesla’s self-driving taxi business. However, investors remain focused on whether the company can scale its robo-taxi operations meaningfully enough to justify the enthusiasm surrounding autonomous driving.
Robo-taxi ambitions face scaling questions
Tesla launched its robo-taxi service in Austin, Texas, in June 2025 and has since expanded operations to several cities, including Miami and Dallas. However, growth has remained relatively slow.
Gary Black, co-founder of Future Fund, estimated that Tesla’s robo-taxi fleet consists of about 100 vehicles. That compares with an estimated fleet of nearly 4,000 vehicles operated by Alphabet’s Waymo across more than a dozen US cities.
Black described Monday’s rally as Tesla bulls getting ahead of themselves, highlighting the gap between expectations and the current scale of Tesla’s robo-taxi operations.
Tesla’s shares remain only a few dollars above their level in late June 2025, shortly after the robo-taxi launch, despite the recent gains. This indicates that investors are still waiting for the business to expand substantially.
Competition in the autonomous ride-hailing market is also increasing.
Amazon’s Zoox is offering robo-taxi rides, while Waymo has expanded its presence and is promoting its service through advertising.
Investors weigh autonomous driving valuation
The potential size and profitability of the robo-taxi market remain uncertain.
Tesla is competing against established and emerging players, making it difficult to determine which company will capture the largest share of the market.
The economics of autonomous ride-hailing are another key consideration for investors.
Morgan Stanley values Tesla’s autonomous driving technologies at roughly $1 trillion, around six times the value it places on the company’s traditional car business.
That valuation highlights the importance of Tesla’s self-driving ambitions to its broader investment case and helps explain why developments around the robo-taxi business can influence the stock.
Tesla Europe sales show mixed picture
Tesla’s August vehicle registrations across several European markets provided a mixed picture.
Registrations, which serve as a proxy for sales, increased 279% year over year in France and 104% in Denmark, according to industry data.
However, registrations declined 79% in Norway and Spain, 41% in Sweden, 37% in Portugal and 36% in Italy.
Rico Luman, senior economist at ING Research, said France and Denmark benefited from increasing electric vehicle adoption and Tesla’s more affordable pricing.
Matthias Schmidt, a European auto market analyst at Schmidt Automotive, attributed the decline in Norway partly to difficult comparisons with the previous year, when buyers accelerated purchases ahead of a fiscal policy change.
Tesla’s European sales have rebounded this year after two consecutive annual declines, helped by easier comparisons, higher fuel prices, government incentives and growing consumer interest in electric vehicles.
Registration data from the UK and Germany, Europe’s two largest car markets, is due later this week and could provide additional insight into Tesla’s sales performance across the region.
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