New York, Feb 4, 2026, 12:52 PM EST — Regular session underway.
- Tesla shares fell 4.7%, slipping to $402.02 after hitting $401.83 earlier.
- Sales of China-made EVs climbed 9.3% year-on-year in January, even as the overall market showed signs of cooling
- Demand and margins stayed in the spotlight as Tesla launched a $41,990 Model Y AWD, while UK January sales showed weakness
Tesla shares dropped 4.7% to $402.02 on Wednesday, nearing their session low. Investors weighed new demand data from China and Europe alongside recent price changes for the popular Model Y.
The decline is significant since Tesla’s next move hinges on volume and pricing power, not just buzz around autonomy. A more affordable Model Y may attract buyers, but it revives the old debate: how much margin is Tesla willing to sacrifice to hold market share?
Growth stocks slid further, dragging the Nasdaq down roughly 1% by late morning. Software and chip shares led the drop, with traders blaming worries that AI is disrupting business models more quickly than anticipated. (Reuters)
Sales of Tesla’s Shanghai-made Model 3 and Model Y climbed 9.3% in January compared to a year earlier, marking a third consecutive month of growth, according to data from the China Passenger Car Association. However, the broader picture shows a slowdown: China’s EV sales and exports are projected to increase just 1% year-on-year, a sharp deceleration from the rapid pace seen in 2025. (Reuters)
Tesla is pushing longer-term financing deals in China, with competitors quickly matching the move, signaling a shift toward price competition. CEO Elon Musk anticipates regulatory approval for Tesla’s driver-supervised Full Self-Driving system in Europe and China as soon as this month. The company aims to boost software revenue amid weakening EV demand. (Reuters)
In the U.S., Tesla unveiled a new all-wheel-drive Model Y variant this week, priced at $41,990. This option is positioned above the cheaper rear-wheel-drive “Standard” version currently listed on its site. According to Reuters, Tesla’s lower-cost “Standard” trims will be key to its 2026 plan, especially after the Trump administration cut the $7,500 federal EV tax credit in September, putting more pressure on pricing.
Europe’s market remains patchy. Registrations, often seen as a sales indicator, climbed in countries like Spain, Sweden, Denmark, and Italy last January. Yet, they dropped steeply in places such as Norway and France, Reuters noted. This highlights a rocky start for the year following Tesla’s European market contraction in 2025. (Reuters)
The UK figures told a sharper story. Tesla’s battery-electric sales in January fell 57% year-on-year to just 647 vehicles, according to New Automotive data. BYD sold 1,326 units in the same period, while Ford topped the segment with 2,271. Tanya Sinclair, CEO of Electric Vehicles UK, noted, “British consumers are still moving towards cars with plugs, and away from those without.” (Reuters)
Autonomy remained in focus. Tesla’s vehicle engineering VP, Lars Moravy, told a U.S. Senate hearing Wednesday that Congress “must modernize regulations” he believes are holding back innovation. Lawmakers are considering long-delayed legislation to speed up the rollout of autonomous vehicles without the need for traditional human controls. (Reuters)
The immediate risk is clear: if demand in crucial markets remains tied to incentives, Tesla might need to continue relying on price cuts and financing to sustain volume. That strategy could pressure margins unless software and services step up to offset the shortfall. Competition in China and Europe shows no signs of fading, and regulatory approvals for wider self-driving deployment remain unpredictable.
Traders are now focused on whether upcoming U.S. data shifts rate expectations following last week’s shutdown disruption. The Labor Department announced the January jobs report, delayed by the shutdown, will drop Feb. 11. The January CPI follows on Feb. 13, and December’s JOLTS figures come out Thursday. (Reuters)
