AUSTIN, Texas: Tesla delivered more vehicles than Wall Street expected in the third quarter, putting the electric-vehicle maker within reach of ending two consecutive years of falling annual sales as its European business recovers.

The company delivered 486,532 vehicles in the July-September period, compared with analysts' average estimate of 456,896 vehicles, according to data compiled by Visible Alpha.

Tesla shares, which have lost about a fifth of their value this year, rose more than five percent in early trading.

The results suggest Tesla's core car business may be regaining momentum even as investors increasingly focus on CEO Elon Musk's push into AI, robotaxis and humanoid robots. Vehicle sales remain Tesla's largest source of revenue, although its roughly US$1.40 trillion valuation depends heavily on those longer-term ambitions.

"The strong numbers put Tesla on track for full-year deliveries growth following two years of declines. I point to FSD (Full Self-Driving) as being a differentiator that drives consumers to choose Tesla over other autos," Morningstar senior equity analyst Seth Goldstein said.

Tesla needs another 311,448 deliveries in the fourth quarter to match last year's total, fewer than it has delivered in any quarter since mid-2022.

In the United States, Tesla's sales were expected to fall from a record third quarter last year after a $7,500 federal tax credit for EV buyers expired at the end of September 2025.

Demand appeared strong heading into the third quarter. Finance chief Vaibhav Taneja said in July Tesla "exited Q2 with our largest order backlog since 2023."

Analysts have raised their full-year forecasts and now expect Tesla to deliver 1.82 million vehicles in 2026, up from a June consensus of 1.65 million.

Tesla's recovery in Europe also gathered pace during the quarter. EU registrations rose by about two-thirds in the January-August period from a year earlier, according to the European Automobile Manufacturers' Association, following last year's slump.

Registration growth was strong in France and Denmark, with broader gains in September helped by government incentives, easier year-ago comparisons and rising consumer interest in EVs.

Analysts expect the gradual rollout of Tesla's Full Self-Driving software in Europe to further support sales, with FSD now approved in eight countries.

Tesla is scheduled to report quarterly results after markets close on October 21.