Happy Friday, and welcome to Critical Materials, your source for the biggest stories shaping the future of the auto industry.

Every Friday, we break down the week’s biggest EV news, keep you up to speed on the cars we’re testing, and recap must-read stories from around the web on driverless cars, batteries, charging, and more.

– Today’s email was written by Rob Stumpf, Suvrat Kothari, and Tim Levin.

After a rocky couple of years, Tesla’s car sales are actually looking… kind of good? Last week, the EV maker said it had delivered just over 480,000 cars worldwide in the second quarter, a 25% year-over-year pop that blew away Wall Street analyst expectations of around 406,000 units. Clearly, I wasn’t the only one who didn’t see this coming. 

It’s the rosiest that Tesla’s car business has looked in recent memory. After moving a record 1.8 million units in 2023, sales dropped for two years straight. Elon Musk’s support of right-wing causes gave the brand a stink. The Cybertruck, its first new model in years, has been a flop. Things were looking bleak. Has Tesla turned the page? It depends where you look. 

Europe clearly led the way, with data from the European Automobile Manufacturers’ Association showing that the brand’s sales shot up by 77% from January through May compared to the same period in 2025. (Tesla itself doesn’t break out its delivery numbers by region.)

It may be that the Musk Effect is finally wearing off. It may also be a matter of a rising tide lifting all boats; plug-in car sales are booming in Europe. So far this year, 2.5 million electric and plug-in hybrid vehicles have been sold on the continent, according to Benchmark Mineral Intelligence, a 27% surge over the first half of 2025. The firm chalks that up to new subsidy schemes and high fuel prices. 

There are a couple of ways to look at this. Sustained, long-term growth in Europe’s EV sector would be a boon for Tesla. But we may be looking at more of a sugar high created by temporarily high gas prices. Analysts aren’t sure if the gains will last for the rest of the year.

“A primary negative interpretation here for us,” analysts at BNP Paribas wrote recently, “centers on the price of crude oil, which is now back to ~$70/barrel and likely incites ratcheted-down EU-led growth through the 2H.” 

In China, meanwhile, Tesla sales fell by about 2% in the second quarter, marking its fifth straight quarter of declines in the country. Still, the automaker has been performing relatively well in a market with both intense competition and a broader slowdown in car sales, said Phate Zhang, founder of the Chinese EV news website CnEVPost. 

“Conventional wisdom might suggest that price cuts and new models by domestic competitors could impact Tesla, but experience over the past several years shows that this is not the case,” he said in an email. Homegrown giant BYD posted a 22% drop in domestic sales for June, suggesting that Tesla is managing a fierce sales environment better than some Chinese giants.

Despite the constant march of new and refreshed EV models, he said, the Model Y is still one of the top-selling SUVs in the country regardless of powertrain. (Tesla moved nearly 39,000 units in June alone.) It and the long-wheelbase Model Y L are still usually the first options people consider when they look to buy an electric car, he said.

“That said, Tesla has yet to introduce any new models, and FSD has not yet been fully rolled out in China, making it difficult for the company to achieve significantly higher sales in the country,” he added.

If a rising tide lifted all boats in Europe, then the opposite is true in the U.S., where things are still not pretty for Tesla or EVs in general. Tesla sold 124,800 cars in the U.S. last quarter, according to estimates from Cox Automotive, a 13% year-over-year drop. Tesla’s bread-and-butter Model Y held relatively steady, with only a 1.5% drop to 84,863 units. But the Model 3 and Cybertruck, plus the discontinued Model S and Model X, saw larger slides on a percentage basis. 

Not great. But Tesla still outperformed the industry, which saw EV sales plunge 20% during the quarter after the tax-credit rug-pull and the demise of other clean-car regulations. The lack of brand-new models—well, ones that people actually want to buy—has spelled trouble for Tesla for a couple of years now. But the company may have its best fix yet. 

Last week Tesla launched the Model Y L to the U.S. market, after debuting it in China last year. The stretched-out Model Y, with a slightly different look and a more usable third row, could get more people in the door, said Ivan Drury, director of insights at Edmunds. Tesla sells a seven-seat version of the regular Model Y, but the way-back is cramped and hard to get to. The L is larger and has second-row captains chairs that should make ingress and egress easier.

“It's a move in the right direction of trying to give people something new, and a little bit different sheet metal,” he said. In focus groups with car buyers, a couple of things are consistently at the top of the list, he added: If a crossover has two rows, they want three. And if it has three rows, they want more space back there. 

Whether that’s enough to reignite Tesla’s growth is another question. The company certainly looks healthier than many expected. Yet its comeback still hinges on a narrow lineup, uneven performance across markets, and the hope that a refreshed Model Y can carry the brand until robots and self-driving taxis become a serious part of the business.

After years of bad news, Tesla finally has a credible case that its car business is stabilizing. Now it’s up to the automaker to prove that this wasn't just a blip, but the beginning of something more.

-Tim Levin

Get up to speed on the news that caught our eye this week:

Audi’s EV sales are hurting in America. The luxury brand has sold fewer than 2,000 battery-electric cars in 2026 so far.

Speaking of sales, German brands as a whole aren’t doing so hot right now in China. The sales slump has continued through the first half of the year as domestic rivals continue crushing brands like BMW and Volkswagen.

The VW Group, meanwhile, has come up with a turnaround plan. It involves culling about half its lineup.

Toyota has delayed the launch of the 2027 Highlander. The popular three-row is set to go electric-only.

Polestar is doomed in the U.S. Owners say feel like they’re left “holding the bag” as the U.S. government forces the automaker out of the States. Now they’re questioning what comes next.

Say hello to the Fiat Topolino. It’s the newest EV in America and costs less than $14,000. The only downside? It’s not technically a car, and its top speed is less than many modern e-bikes.

We got to check out Scout’s upcoming Traveler and Terra electric trucks up close—and totally understand the hype behind them despite the long lead time. Here’s why they might actually be worth the wait. 

We compiled all the best EV lease and finance deals in the country right now. The Hyundai lineup is looking particularly good.

Shameless plug: On this week’s Plugged-In Podcast, Mack and Tim answer your burning EV questions.

Considering a Ford EV, but haven’t bought a home charger yet? Good news, because the Blue Oval says that it will extend its Power Promise program that covers not just the cost of a new Level 2 home charger, but also the installation cost.

Battery degradation has always been a hot-button topic, but modern electric cars aren’t the same as the EVs of yore. Here’s why the stigma exists (and why it’s all the Nissan Leaf’s fault).

Voltpost is boosting deployments of its lamppost-based EV chargers through a new partnership with InCharge Energy. Projects kick off in New York, Connecticut, and California.

The feds are having a rough time with autonomous cars right now. The National Highway Transportation Safety Administration recently issued a stern warning to AV developers to shape up when interacting with emergency responders.

The agency is also mulling the idea of allowing cars that are designed for autonomous operation to ditch steering wheels.

New Jersey has introduced a bill that would outlaw Tesla’s approach to robotaxis. Here’s how it works, and why it affects Tesla more than any other brand.

Tesla's Robotaxi service is rolling out in Miami. The company's AI boss confirmed that its fleet of cars (which includes Cybercabs) will be operating unsupervised in the Magic City.

-Rob Stumpf

That’s how many EVs carmakers sold in the U.S. in the second quarter, according to estimates put out Friday by Cox Automotive. While sales remained down compared to a year ago, Q2 marked the best quarter for EVs in the post-tax-credit era, suggesting the market is beginning to recover from last year's policy shocks.

Sales were down 20.5% compared to the same period last year when the EV tax credit was still in place. But the quarterly growth paints a clearer picture of how the market is settling into its new reality after the incentive expired.

-Suvrat Kothari

The factory where, arguably, the EV revolution really began, is now a big empty box. Tesla stripped out its Model S and Model X facility in California to prep it for Optimus robot production. It shared a cool video of the process, which you can watch above. End of an era, for sure.

Thanks for reading Critical Materials. See you next week!

-Tim Levin