Tesla’s core automotive business showed signs of renewed momentum in the third quarter as deliveries substantially exceeded Wall Street expectations, offering the electric-vehicle maker a potential path back to annual sales growth. The stronger results were supported by a rebound in European demand, helping offset weaker conditions in the United States and intensified competition in China.

Tesla Delivers Above Expectations

Tesla delivered 486,532 vehicles between July and September, according to company figures cited by Reuters. That was well above the Visible Alpha consensus of 456,896 vehicles, representing a difference of 29,636 vehicles and providing a stronger-than-expected quarterly performance for the automaker.

The result was particularly significant because Tesla has experienced two consecutive years of declining annual deliveries. The company now needs to deliver at least 311,448 vehicles in the fourth quarter to avoid a third straight annual decline. Analysts have also raised their average full-year delivery forecast to 1.82 million vehicles, compared with 1.65 million in the June consensus.

Europe Provides an Important Demand Rebound

Europe emerged as a key source of improvement during the quarter. Tesla’s European registrations had weakened substantially last year, but registrations across the European Union rose by about two-thirds through August, according to the Reuters report. In France, the Model Y became the best-selling vehicle of any type, marking the first time a Tesla model topped the country’s overall ranking.

Exports from Tesla’s Shanghai factory also nearly doubled in July and August. The developments suggest that regional demand and production allocation are becoming important factors in Tesla’s efforts to stabilize its vehicle business as the company operates without the support of US federal electric-vehicle tax incentives.

Automotive Recovery Comes Alongside AI Ambitions

The delivery figures remain important because vehicle sales are still Tesla’s largest source of revenue, even as investors increasingly focus on CEO Elon Musk’s longer-term plans for artificial intelligence, robotaxis and humanoid robots.

Tesla’s robotaxi service has expanded in Texas and Florida without an in-car safety supervisor, while the company has added its purpose-built Cybercab to its Austin service. Its Full Self-Driving software has also been approved in eight European countries, potentially creating another avenue for the company to strengthen its position in the region.

Fourth Quarter Becomes the Next Test

Tesla’s shares rose more than 3% in early trading after the delivery figures were released, although the stock had fallen more than 21% through the previous close this year. The market response reflects the importance investors continue to place on the company’s ability to stabilize its core automotive operations while developing newer technology-driven businesses.

The next major test will come with Tesla’s third-quarter financial results on October 21 after the market closes. Investors will be watching vehicle deliveries, margins, regional demand and the contribution of emerging businesses. The company’s ability to maintain European momentum and reach the required fourth-quarter delivery threshold will help determine whether the latest improvement marks a sustained change in its automotive trajectory or a temporary rebound.