Tesla is showing signs of a recovery after a difficult two-year period, with stronger-than-expected vehicle deliveries in the third quarter putting the electric-car maker on course to return to annual sales growth.

Tesla delivered 486,532 vehicles between July and September 2026, comfortably exceeding analysts’ average forecast of 456,896. The results helped push Tesla shares more than 5% higher in early trading, although the stock remained around 20% lower for the year.

The recovery has been particularly noticeable in Europe, where Tesla’s sales had suffered last year amid competition from cheaper Chinese electric vehicles and controversy surrounding CEO Elon Musk.

European registrations increased sharply during the first eight months of 2026, while sales continued to improve in the third quarter.

Analysts have responded by raising their forecasts for Tesla’s full-year deliveries to approximately 1.82 million vehicles, compared with an earlier estimate of 1.65 million. Tesla now needs just 311,448 additional deliveries to match its 2025 total.

However, challenges remain in the United States following the expiration of a $7,500 federal electric-vehicle tax credit. Meanwhile, investors are increasingly focused on Tesla’s longer-term ambitions in artificial intelligence, Full Self-Driving technology, robotaxis and humanoid robots.

Tesla’s robotaxi service is expanding in Texas and Florida, while its Cybercab has joined the existing fleet in Austin.

The company is due to report its third-quarter financial results on October 21. Investors will be watching closely to see whether the sales rebound translates into stronger profits and supports Tesla’s ambitious valuation.