Tesla’s global sales edged up in the first quarter of 2026, but that did little to calm investors. Despite the increase, the company’s production and delivery figures sent shares down more than 5 percent on Thursday, marking their sharpest drop of the year. The stock is now down about 20 percent in 2026.

Read: Tesla’s Sales Collapsed By Nearly 90% In The Land Of EVs

In total, Tesla sold 358,023 vehicles worldwide in Q1 2026. That marks a 6 percent increase over the same quarter last year, when it delivered 336,681 vehicles. The bigger contrast comes against the previous quarter. Deliveries are down 14.3 percent from the 418,227 vehicles handed over in Q4 2025.

US Sales Range Estimates

The company has not released a detailed breakdown for the US, but estimates from Autonews and Cox Automotive put first-quarter deliveries somewhere between 110,000 and 122,196 units. That range points to a decline of roughly 4.6 percent to 15 percent in its home market, depending on where the final number lands.

According to Morningstar analyst Seth Goldstein, there are two key reasons to explain why sales fell.

“Tesla’s first-quarter deliveries reflect the U.S. tax credit expiration as well as FSD ​not yet being approved in the EU,” he told Reuters. “These factors will likely continue to weigh on deliveries until Tesla gets EU approval and until we enter the fourth quarter in the U.S.”

As deliveries softened compared to the previous quarter, the gap between vehicles produced and sold widened to its largest level in four years. Tesla ended the quarter with 408,386 vehicles built, leaving a surplus of 50,363 units in inventory.

Data cited by Business Insider shows this is the largest gap between production and deliveries the company has recorded. That stands out for a business that has typically kept supply and demand closely aligned. The closest comparison comes from the same period in 2024, when production exceeded deliveries by around 46,500 vehicles.

Lower Than Analyst Expectations

The carmaker began to temper expectations for the first quarter last week, publishing a delivery consensus based on estimates from more than a dozen analysts. This suggests Tesla would end the quarter with 365,645 deliveries, but it fell short of that. Separate estimates from StreetAccount had projected around 370,000 deliveries.

The analysts also predicted Tesla would deploy 14.4 GWh worth of energy storage, but it actually delivered just 8.8 GWh of energy storage products. That figure is also down from 10.4 GWh in Q1 2025 and 14.2 GWh in Q4 2025.

As we’ve come to expect, the Model 3 and Model Y account for the bulk of the company’s sales, with 341,893 finding new homes. The remaining 16,130 vehicles delivered included a mix of the Cybertruck, Semi and the now-discontinued Model S and Model X.

The NHTSA has intensified its scrutiny of Tesla’s Full-Self Driving system, focusing on how it copes when visibility drops. That escalation pushes the probe closer to a potential recall, one that could affect more than 3.2 million vehicles across the United States.

The agency first opened a preliminary evaluation in October 2024 to assess FSD’s ability to detect and respond appropriately in reduced roadway visibility. That probe has now been upgraded to an engineering analysis, which will examine how the vision-only system behaves in adverse conditions and whether it can alert drivers with enough time to react.

Read: Tesla Owners Furious After FSD Transfer Rules Change Again

According to regulators, Tesla developed and implemented a degradation detection system after transitioning to its camera-based vision setup in mid-2021, abandoning radar and other sensors. The company began working on an update to this system in June 2024, following a report of a fatal crash involving one of its vehicles on November 28, 2023

Rain Is FSD’s Enemy

In its preliminary evaluation, the NHTSA began piecing together how Tesla’s Full Self-Driving system behaves in less-than-ideal conditions. The agency learned from Tesla that FSD’s ability to detect and respond to poor road conditions may have contributed to 3 of the 9 incidents identified by the Office of Defects Investigation (ODI).

In the crashes reviewed, the system failed to recognize common roadway conditions that affected camera visibility and did not issue alerts when camera performance degraded until just before impact.

A subsequent review of Tesla’s responses uncovered other crashes that occurred under similar circumstances. In these cases, the FSD system also lost track or “never detected a lead vehicle in its path.” The NHTSA also notes that Tesla says internal data and labeling limitations have prevented a uniform identification and analysis of crash events with the system engaged, meaning there is a possibility of under-reporting crashes.

The probe covers an estimated 3,203,754 Tesla vehicles, including the 2016-2026 Model S and X, 2017-2026 Model 3, 2020-2026 Model Y, and 2023-2026 Cybertruck models equipped with FSD.