Key Points

• Tesla is preparing for an exciting 2026 replete with production ramp-ups and potential wider approval of its full self-driving (FSD) technology.

• The risk is rising as the company appears to be going all-in on full self-driving and robotaxis.

• The stock remains attractive for risk-tolerant investors.

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Tesla (NASDAQ: TSLA) recently declared, via an X post, that it was “excited to bring its full self-driving (FSD) to our owners in Europe soon” after claiming that the relevant agency in the Netherlands — the Netherlands Vehicle Authority (RDW) — “has committed to granting Netherlands National approval in February 2026.”

It’s not quite as straightforward as implied in Tesla’s post, but it still represents a significant development in unlocking the full value of the electric vehicle (EV) maker’s technology, potentially serving as a major stepping stone toward management’s long-term goals.

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Tesla’s stock valuation

If Tesla’s value lies primarily in its robotaxi and FSD businesses, then it makes sense to view positive developments on both issues as having a disproportionate impact on the stock. To clarify, they are distinct but closely-related concepts. The company currently has supervised FSD (which requires a driver to be ready to assume control) available in the U.S., Canada, Puerto Rico, New Zealand, Australia, Mexico, and China.

Its supervised FSD is not quite the same as the more advanced supervised FSD version the company is using for its robotaxi rollout, and neither version is the unsupervised FSD that Tesla is aiming for.

As such, the approval of supervised FSD doesn’t mean robotaxis are approved. However, it would represent a major stepping stone on the road to European approval for commercial deployment of Tesla robotaxis, as they have been in Austin, Texas. Not least, as customers gain experience with FSD, the company will begin to collect a vast amount of data from a fleet of its vehicles driving with FSD.

Supervised full self-driving in Europe is a big deal

The lack of commercially available supervised FSD is hindering Tesla’s growth potential, and in turn, any snowball effect of interest in its robotaxi concept. For example, on the lastearnings call chief financial officer Vaibhav Taneja said that the company’s “total paid FSD customer base is still small, around 12% of our current fleet. We’re moving — we’re working with regulators in places like China and [the Europe, the Middle East, and Africa region] to obtain approvals so that we can get FSD in those regions as well.”

Image source: Tesla.

Consequently, FSD approval in the Netherlands, followed by wider-scale approvals in Europe, would open up more potential customers across the European Union (EU). As the RDW outlined in a public response to Tesla’s message on X, if and when it grants Tesla approval, the Netherlands can “submit an application to the European Commission on behalf of the manufacturer,” according to RDW.

An EU-wide decision is then made by a qualified majority vote (at least 55% of EU states representing at least 65% of the EU population). A “yes” vote leads to EU-wide approval, while a “no” vote would leave FSD approved in the Netherlands with further decisions then made at a coutry level in Europe.

Clearly, there are several pathways for Tesla to receive multiple approvals for FSD in Europe in 2026, if not a single EU-wide green light.

What it means for the investment case for Tesla

FSD approval is crucial for Tesla because the stock’s valuation is not based on its EV business. It will also raise awareness for the potential for robotaxis and add value to the company’s EVs and its robotaxi concept.

Tesla is already going all-in on Cybercab production in 2026, partly on CEO Elon Musk’s conviction and “clarity” that unsupervised FSD is around the corner.

Image source: Tesla.

While there’s no guarantee that the RDW will grant Tesla’s supervised FSD approval next year, it’s clearly a milestone event that would strengthen the case for the stock. That said, the commitment to ramping up EV and Cybercab production in 2026 is increasing the downside risk if the ongoing robotaxi rollout falters or there’s a slowdown in FSD approvals worldwide.

As such, Tesla remains an attractive stock for growth investors and has considerable upside potential, but it’s not suitable for those without a tolerance for downside risk.

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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.