Tesla's shipments from China have taken a significant hit, with recent reports indicating a drastic drop of 49% year-over-year. According to data from the China Passenger Car Association (CPCA), shipments fell to just 30,688 units in February 2025, marking the lowest levels seen in almost three years. This decline follows January's shipment figures of 63,238, representing more than a 50% decrease and signaling concerning trends for the leading electric vehicle manufacturer.
The data is even more alarming against the backdrop of overall wholesale sales of new energy vehicles (NEVs), which surged to 840,000 units sold in China for the same month—a notable 82% increase from last year. This disparity highlights Tesla's struggles within what is becoming an increasingly competitive market. Consequently, Tesla's stock has also suffered, closing down 4.4% on March 10, 2025, bringing its year-to-date decline to 32.6%.
Market analysts are sounding alarms, with John Murphy of Bank of America recently slashing Tesla's price target from $490 to $380, directly attributing the revision to weakening European sales and fluctuations affecting consumer sentiment toward the brand. The challenges facing Tesla are twofold: not only is it contending with shifts in consumer preferences toward electrified alternatives such as hybrids, but it is also seeing increased competition from domestic automakers like BYD, which are offering well-received, lower-cost EVs with advanced technologies.
Microsoft's decision to escalate tariffs on Chinese goods to 20% this week adds another layer of uncertainty for the manufacturer. Elon Musk’s political engagements, which affect perceptions of Tesla, may have less impact within China, where he has been viewed favorably. Yet, there is mounting concern about how political ties might impede Tesla's operating capabilities, particularly with the rollout of its Full Self-Driving (FSD) technology, anticipated to be subject to regulatory approval from the Chinese government, which could utilize this as leverage in tariff negotiations with the U.S. administration.
On Wall Street, the mood is undeniably pessimistic. Tesla shares plummeted more than 15% on March 10, reaching their lowest level since before the presidential election, and over 50% down from the record high of $479 set back on December 17, 2024. Analysts at UBS have echoed the grim sentiment, cutting their price target on Tesla to $225 from $259, citing diminished delivery forecasts for the first quarter due to weak demand for Tesla's Model 3 and Model Y models. They now expect deliveries to shrink by 5% compared to last year and drop 26% from the previous quarter, forecasting only 367,000 vehicles will be delivered by the end of Q1.
Further discouragement is palpable, as UBS analysts reported, "...our UBS Evidence Lab data shows low delivery times for the Model 3 and Model Y (generally within 2 weeks) in key markets, which we believe is indicative of softer demand." After the plunge on Monday, shares hit notable lows, marking their worst single-day performance since September 2020.
Despite the downturn, some of Tesla's staunchest proponents are stepping forward. Dan Ives at Wedbush emphasized Tesla’s historic resilience during challenging times, stating, "This is not the first time Tesla has seen a drawdown of this magnitude..." He remains optimistic, adding the company to his “Best Ideas List” with a price target of $550. Ives views the current downturn as pivotal, reflecting the long-term potential and value inherent within the Tesla brand.
Similarly, Morgan Stanley's Adam Jonas holds steadfast to his bullish outlook, predicting share prices will rebound to around $430 as the company diversifies beyond electric vehicles toward artificial intelligence and robotics. He characterized the current fiscal environment, even with softer auto deliveries, as "emblematic of a company transitioning from pure play automotive to diversified tech play. This evolution could present quality entry points for investors." He believes this transition could attract new capital and interest, even if it results in some drop-off in deliveries for 2025.
With the electric vehicle market rapidly transforming and Tesla facing strong challenges from domestic competitors, investors and analysts alike are left watching to see how the company will navigate these turbulent waters. Observers are left wondering if the once-unshakeable titan of the industry can regain its footing amid significant shifts not only within its operating territories but also pertaining to its public reception globally. Only time will tell if Tesla can adapt and rise, yet the current market reflects both the challenges and opportunities lying within the next chapter of this automotive giant’s story.