Tesla Navigates a Fork in the Road: FSD Green Lights in Europe Meet a Divided Sales Outlook

Tesla's autonomous driving gains approvals in Belgium and Denmark with caveats, while Chinese drivers bypass safety monitoring. Q2 delivery forecast raised to 420k units as Europe surges, US declines.

Tesla is juggling two conflicting realities this quarter. In Europe, regulators are opening doors for its autonomous-driving software, while Chinese drivers are finding cheap ways to keep the Autopilot engaged without supervision. Meanwhile, the market is bracing for second-quarter delivery numbers that could test the narrative of a demand revival.

The stock edged down 1.48% to €349.00 on Tuesday, hovering just above its 50-day moving average after slipping below the 200-day line of €358.45 last week. From the start of the year, the shares are off roughly 7%, yet over a 12-month span they still show a gain of nearly 23%.

Belgium and Denmark Clear FSD – With a Caveat

The most tangible catalyst for the European push came on June 10, when Belgium granted official approval for “FSD Supervised” after Tesla logged 5,000 test kilometres on Flemish roads. Denmark had followed a day earlier with a provisional permit. Both approvals rely on a Dutch type-approval as their legal backbone, accelerating country-by-country rollout.

There is a six-month expiry clause attached to each national nod. Should the European Commission eventually rule against the technology, all individual authorisations would collapse immediately. A bloc-wide decision is expected no earlier than October, with some observers pushing the timeline into early 2027. Until then, Tesla can expand the FSD footprint within these member states, but the regulatory sword of Damocles remains visible.

A Cheap Workaround in China

On the other side of the globe, the driver-monitoring system meant to enforce attentive use of Autopilot is being defeated by a simple trick. Chinese owners are attaching small plastic figurines or pressing smartphone videos against the interior camera to simulate an alert driver. When the camera detects no distraction, the system allows autonomy to engage. These gadgets, costing between $20 and $50, are flooding Asian online marketplaces.

The loophole appeared after a software update activated the camera above the rear-view mirror to detect driver inattention. Tesla has historically responded to such exploits with over-the-air patches, and the clock is ticking: continued circumvention could erode trust with regulators just as Europe opens up.

Delivery Expectations Get a Lift

The sales picture remains mixed across regions, adding another layer of complexity. Analysts at Goldman Sachs recently raised their quarterly delivery forecast to 420,000 units, a figure notably above the broader consensus. The optimism is fuelled by a stark divergence in regional trends.

• Europe: Registrations through May surged 85% to 90% year-on-year, driven by Model Y and refreshed Model 3 demand.
• China: The key Asian market is posting solid growth in the high single-digit percentage range.
• United States: The home market is a drag, with deliveries declining by a mid-teen percentage in the latest period.

The European strength is particularly important as it offsets weakness elsewhere, but the sheer gap between continents underscores how uneven the recovery is.

The Capital Rotation That Changed Everything

The investment case for Tesla was straightforward for over a decade: bet on Elon Musk’s ecosystem, buy the stock. That exclusivity ended in mid-June when SpaceX went public, splitting the so-called “Musk premium” between two listed behemoths. Early data suggest institutional investors are rebalancing their exposure, diverting capital away from Tesla toward the new SpaceX listing. The rotation is a headwind that did not exist three months ago.

Tesla’s market capitalisation still sits above €1.3 trillion, a level that reflects enormous expectations for the “physical AI” pivot outlined in Master Plan Part IV. The Cybercab and Optimus robot remain central to that vision, and any delay in commercial rollout could amplify the pressure created by capital migration.

What to Watch Next

All eyes are on July 23, 2026, when Tesla reports second-quarter earnings. The headline delivery number will be important, but the market is shifting its focus to progress on autonomy and AI execution. If management cannot demonstrate concrete steps toward FSD commercialisation or robot deployment, the rotation of institutional money out of Tesla and into SpaceX may only be gathering pace.

The next EU committee meeting on automated driving, scheduled for late June, will determine the immediate regulatory roadmap. Tesla needs to close the Chinese safety gap before then to maintain credibility with watchdogs. For now, the stock remains stuck between a promising European opening and the structural forces reshaping the Musk universe.