Tesla shares edged higher in Thursday's premarket trading as the electric vehicle maker continues pursuing regulatory approval for its Full Self-Driving (FSD) technology across Europe—a milestone that could open a significant new revenue channel in one of the world's largest automotive markets.

The stock rose approximately 0.1% to $321.78 before the opening bell. Year to date, shares are down 29%, while the trailing twelve-month period shows a modest 1% gain.

Dutch Approval Sets Precedent, but Challenges Remain

Dutch regulators became the first within the European Union to greenlight FSD usage earlier in 2025. However, according to Reuters, the Netherlands has classified its approval documentation as confidential, potentially complicating efforts by other member states to replicate that decision.

If individual EU nations decline to follow the Dutch model, Tesla would need to pursue approval through European Commission channels. Under that pathway, the technical documentation would be reviewed by the Technical Committee on Motor Vehicles. Approval would require backing from at least 55% of EU member countries representing no less than 65% of the bloc's total population. That vote is expected in October.

Should the Commission route fail, Tesla retains an alternative option through the United Nations Economic Commission for Europe (UNECE). A two-thirds supermajority vote there would grant continent-wide FSD authorization, with such a vote potentially taking place in November.

Europe's regulatory environment for automated driving has historically applied stricter standards than the United States. The UNECE framework already governs certain automated driving functions, including UN Regulation No. 157 on Automated Lane Keeping Systems, and competitors such as Mercedes-Benz have secured conditional Level 3 approval in Germany for their Drive Pilot system under existing rules.

FSD Subscription Revenue Concentrated in North America

Tesla's FSD subscription revenue currently comes entirely from North American customers. The company reported 1.5 million active subscribers at the end of the second quarter, a 56% year-over-year increase. At a monthly subscription price of $99, that base translates to approximately $2 billion in annualized revenue. Tesla also noted that roughly 55% of vehicles delivered during Q2 included FSD subscription packages.

Securing European authorization would substantially broaden this revenue stream, as Tesla currently operates Gigafactory Berlin, which serves the European market and could facilitate software adoption across the installed regional fleet.

Mixed Q2 Financial Results

Tesla's second-quarter performance painted a mixed picture. Revenue reached $28.24 billion, up 25.5% year over year and beating analyst expectations of $26.42 billion. However, earnings per share came in at $0.33, well below the consensus estimate of $0.50. Operating income and free cash flow also fell short of projections.

Analyst Sentiment Divided

Wall Street remains split on the stock. The consensus recommendation stands at Hold, with a mean price target of $401.74. Deutsche Bank has set a $420 price target, while Canaccord Genuity carries a Buy rating with a $410 target. Goldman Sachs also rates the stock as Buy. On the bearish side, Wells Fargo maintains an Underweight designation with a $130 price objective.

Institutional ownership accounts for 66.2% of outstanding shares. Sanders Morris Harris increased its Tesla position by 54.6% during the second quarter, raising holdings to 7,684 shares valued at approximately $3.23 million. ARK Invest's Cathie Wood has reportedly purchased an additional $14.3 million in Tesla shares in recent sessions, while Michael Burry continues to hold bearish short positions.

Tesla's 52-week trading range spans from $297.38 to $498.83, and the stock trades at a price-to-earnings ratio of 297.73.

Separately, vehicle sales from Tesla's Chinese manufacturing facilities rose 37.8% year over year in July, marking the ninth consecutive month of growth.