Tesla stock tumbled roughly 4% on Tuesday as a hotter-than-expected US inflation reading triggered a broad selloff across technology and growth stocks.
The decline followed a strong stretch for Tesla shares.
The stock had surged nearly 10% over the previous week and added another 3.8% on Monday as investors increasingly focused on the company’s artificial intelligence and autonomous driving ambitions.
Markets turned sharply lower after April consumer inflation data came in above expectations.
The S&P 500 fell 0.8%, while the Nasdaq Composite dropped 1.6% as investors reassessed the outlook for interest rates.
The inflation report showed annual consumer price growth accelerating to 3.8%, the highest level since May 2023 and slightly above economists’ forecasts.
The data has particularly pressured high-valuation momentum stocks, such as Tesla, whose share price remains heavily tied to long-term growth expectations.
China remains key focus for investors
Despite Tuesday’s selloff, investor attention remained fixed on China and Tesla’s efforts to secure regulatory approval for Full Self-Driving software.
Chief Executive Elon Musk is expected to join US President Donald Trump during a May 13–15 state visit to Beijing.
The delegation is expected to include several major US technology and financial executives, including Tim Cook and Larry Fink.
For Tesla, the central objective surrounding the visit remains gaining full approval for its Full Self-Driving technology in China.
Musk previously indicated regulators could approve the system around February or March 2026, though that timeline has since slipped.
Tesla executives now reportedly expect approval sometime during the third quarter of 2026 after the earlier regulatory window passed without clearance.
China remains one of Tesla’s most strategically important markets, particularly for the long-term monetization of autonomous driving software subscriptions.
The company has spent heavily building local infrastructure in China to comply with regulatory requirements surrounding data storage and AI systems.
Tesla expands Germany battery investment
Separately on Tuesday, Tesla announced a major expansion of battery-cell investments at its factory near Berlin.
The company said it would increase investment in battery production at its Gruenheide facility by nearly $250 million.
Tesla now plans to expand annual battery-cell production capacity at the site to 18 gigawatt-hours, more than double its previously planned 8 GWh target.
The move builds on Tesla’s previously announced €1 billion investment program for the German facility as the company works to integrate battery-cell and vehicle manufacturing operations under one roof beginning next year.
Tesla said the expansion would also significantly increase hiring needs, with battery-cell staffing expected to exceed 1,500 workers.
AI still drives Tesla’s valuation
While Tesla continues investing heavily in manufacturing and vehicle production, investor sentiment remains dominated by the company’s AI-related initiatives.
Much of Tesla’s valuation continues to depend on expectations surrounding autonomous driving, robotaxis, and humanoid robotics rather than traditional automotive metrics.
The company launched its robotaxi service in Austin, Texas, in June, though expansion into additional cities has progressed more slowly than many investors anticipated.
As a result, markets remain highly sensitive to any updates tied to Tesla’s autonomous driving roadmap, particularly developments in China, which is widely viewed as critical to scaling the company’s software and AI businesses globally.
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