Tesla shares rose 0.4% to $350.81 in early trading, outperforming a weaker broader market.
The S&P 500 and the Dow Jones Industrial Average fell 0.1% and 0.3%, respectively, as geopolitical tensions escalated.
The move followed comments from Donald Trump, who said the US Navy would blockade the Strait of Hormuz after peace talks with Iran failed.
The development pushed benchmark crude prices up 6% to above $100 per barrel.
Europe approves Tesla’s FSD system
Tesla’s gains were driven by regulatory progress in Europe.
Authorities in the Netherlands approved the company’s Full Self-Driving (FSD) driver-assistance system, marking the first such approval in the region.
Cantor Fitzgerald analyst Andres Sheppard said the decision is significant.
“We view this as material, since it marks the first country in Europe to grant regulatory approval of Tesla’s FSD, or to allow autonomous vehicles on European roads,” he wrote, adding that Tesla expects approvals in additional European countries “soon.”
Sheppard maintains a Buy rating on the stock with a $510 price target.
The approval includes important limitations. The Netherlands’ RDW vehicle authority said the system requires active driver supervision at all times.
“FSD Supervised is not self-driving,” the regulator said, noting that drivers must remain attentive and ready to take control.
It added that the European version of the system differs from the US version, with tighter constraints in place.
Self-driving central to Tesla valuation
Autonomous driving technology remains a key pillar of Tesla’s valuation.
In many Wall Street models, self-driving capabilities account for a significant portion of the company’s roughly $1.5 trillion market value.
Tesla trades at a punishing premium, with a trailing price-to-earnings ratio ranging between roughly 295x and 325x depending on which earnings figure is used.
On a forward basis, consensus analyst estimates peg the 2026 P/E at approximately 174x, suggesting the market is pricing in a dramatic earnings recovery that has yet to materialise.
Investors use P/E multiples to gauge a stock’s valuation relative to its anticipated future earnings.
With the growth of online trading apps, tracking such metrics has become significantly easier and more accessible to market participants.
Tesla recently launched a robo-taxi service in Austin, Texas, and investors expect further expansion into additional cities.
More details on FSD and robo-taxi plans are expected when Tesla reports first-quarter earnings on April 22.
Weak deliveries weigh on sentiment
Despite the regulatory progress, Tesla’s stock has remained under pressure in recent months.
The company recently reported first-quarter deliveries of 358,023 vehicles, below the consensus estimate of 365,645.
Production also missed expectations, coming in at 408,386 units versus forecasts of 446,063.
The shortfall has raised concerns about demand momentum as the company heads into its earnings report.
Tesla continues to invest heavily in artificial intelligence, including self-driving systems and robotics.
The company is also spending billions to convert Model S and Model X production capacity into a robot assembly line at its Fremont facility.
However, its automotive business remains central to earnings and cash flow.
The contrast highlights Tesla’s current positioning. While long-term expectations hinge on AI and autonomy, near-term performance remains tied to vehicle demand and execution.
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