Tesla Shares Face Dual Challenges: Regulatory Hurdles and European Sales Slump

Tesla faces a dual challenge as European sales decline for the 13th straight month and California DMV data shows zero autonomous test miles for 2025, raising questions about its future tech timeline.

Tesla's stock is currently navigating a complex landscape where ambitious long-term technological goals are colliding with immediate business headwinds. Investor sentiment is being tested by a combination of regulatory scrutiny over its autonomous driving initiatives and persistent weakness in a key regional market.

European Demand Continues to Contract

Fresh data from Europe has delivered another blow to the electric vehicle maker's core automotive business. For the 13th consecutive month, Tesla's sales in the region have declined, dropping by 17% year-over-year in January. This downturn is particularly notable as it occurred during a period of overall growth for the battery-electric vehicle (BEV) market across Europe.

The figures highlight intensifying competitive pressure, with manufacturers like China's BYD cited as having significantly expanded their European market share. This erosion in Tesla's established business is a critical concern for investors, as it directly impacts the company's primary revenue and volume engine.

Autonomous Driving Ambitions Face Scrutiny

Simultaneously, doubts are mounting regarding the timeline for Tesla's robotaxi plans. A report focusing on testing practices in California—a crucial U.S. auto market and a regulatory hub for self-driving technology—has raised questions. According to documents from the California Department of Motor Vehicles (DMV), Tesla recorded zero miles of autonomous test driving in the state for the year 2025.

The significance lies in the context: while Tesla holds a basic permit, the report indicates it has not secured the more advanced authorizations required to operate fully driverless vehicles. This gap is accentuated by the progress of competitors, who have reportedly logged millions of test miles and obtained multiple regulatory approvals.

The situation is further complicated by Tesla's reported disputes with California regulators over the marketing and terminology used to describe its autonomy features.

Investor Dilemma: Future Investment vs. Present Weakness

The timing of these challenges creates a strategic tension for the market. Tesla is reportedly planning a substantial increase in capital expenditures to fund projects in artificial intelligence, robotics, and new vehicle production. Many investors are pinning their hopes on future products like the Optimus robot and dedicated robotaxis.

However, the persistent softening in the company's foundational car business raises a pressing question: what happens if this core segment continues to weaken while heavy investments are made in future technologies? This conflict between present performance and future promise is currently shaping market perception.

Trading reflected this uncertainty, with Tesla's stock remaining under pressure on Thursday. Shares closed at 346.20 euros, marking a decline of 2.05%.

In the near term, market observers will be watching for two key developments: visible progress on the robotaxi regulatory front and a stabilization of the negative sales trend in Europe. For now, both narratives are contributing to investor caution rather than fueling renewed confidence.