Tesla presents a contradictory picture to the market. The electric vehicle maker’s shares recently hit a record high, even as it faces a new safety probe in the United States and reports a severe downturn in European sales. This divergence raises questions about whether investor excitement over future autonomous driving technology is overshadowing present fundamental challenges.
Regulatory Pressure Intensifies with Safety Investigation
A new investigation by the U.S. National Highway Traffic Safety Administration (NHTSA) adds to Tesla’s regulatory concerns. The probe focuses on approximately 179,000 Model 3 vehicles from the 2022 model year, specifically examining the mechanical door release system. According to the agency, the mechanism is “concealed, unlabeled, and difficult to locate in an emergency,” which could hinder occupant exit.
The investigation was prompted by a complaint from a Tesla owner who reported being trapped during a vehicle fire, ultimately escaping only through the rear window. This scrutiny increases pressure on the company, which has previously faced criticism over its door handle design.
European Market Experiences Sharp Contraction
While regulatory issues mount, Tesla’s sales performance is weakening significantly. The European Union market is a particular area of concern, where deliveries through November 2025 plummeted by nearly 39% compared to the same period the prior year. This represents one of the steepest declines in a core region for the automaker.
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The negative trend is evident globally:
* U.S. deliveries are projected to fall by 9% for the full year.
* In China, cumulative deliveries through November are down by more than 8%.
* November sales in the United States alone dropped to their lowest level since January 2022.
Stock Performance Defies Operational Headwinds
Despite these operational setbacks, Tesla’s equity recently achieved a new intraday all-time high of $498.83. Market observers note a clear decoupling of the stock price from current delivery figures. The primary catalyst appears to be investor focus on Tesla’s advancements in self-driving technology. The company’s testing of robotaxis without a safety driver in the passenger seat in Austin, Texas, is fueling market optimism about long-term growth.
Analyst reactions to this split reality are mixed. While financial institutions including Canaccord and UBS reduced their fourth-quarter delivery forecasts to as low as 415,000 vehicles, they simultaneously raised their price targets for the stock. Canaccord now assigns a fair value estimate of $551 per share, arguing that the market is looking past a weak quarter to focus on long-term growth drivers.
Tesla is scheduled to report its fourth-quarter delivery figures in early January 2026. Analysts anticipate a 7.7% decline in full-year 2025 sales to approximately 1.65 million vehicles. Although a recovery to 1.86 million units is forecast for 2026, achieving this goal remains challenging given intensifying competition across the electric vehicle sector.
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