Tesla, Inc. (TSLA) is facing a tumultuous period as analysts at Wells Fargo maintain an "Underweight" rating on the stock, predicting a significant downturn for the electric vehicle (EV) giant. According to a note released by Wells Fargo analyst Colin Langan, Tesla's stock price could plummet by as much as 53% from current levels, with a target price set at $130. This forecast comes as Tesla shares have already dropped 32% year-to-date and are down 44% since mid-December 2024.
One of the primary concerns highlighted by Wells Fargo is a projected decline in vehicle deliveries across key markets, including Europe, China, and North America. Langan noted that deliveries are expected to trend 40% lower in Europe, 14% lower in China, and 3% lower in North America by 2025. This anticipated slowdown in sales coincides with increasing protests against Tesla, largely fueled by CEO Elon Musk's close ties to the Trump administration and his controversial role in leading the newly formed Department of Government Efficiency (DOGE).
Adding to Tesla's woes is the potential elimination of a $7,500 federal tax credit, which could further hinder sales. The bank's analysts are particularly skeptical about Tesla's ability to rebound, stating, "The pain for Tesla investors may not be over." They argue that the company has exhausted its options for driving a sales boom, having already implemented significant price cuts over the past two years.
Moreover, the eagerly anticipated launch of a low-cost model, often referred to as the "Model 2.5," has not generated the excitement Wall Street had hoped for. Analysts believe that the lack of concrete details regarding this vehicle's release raises questions about its impact on Tesla's sales and profit margins. "The lack of details so close to the reveal makes us cautious on the affordable model," Langan commented. If the lower-cost model does launch, it could divert buyers from Tesla's higher-priced offerings, potentially cannibalizing sales by about 16%.
Adding to the uncertainty, Tesla's ambitious plans for a robotaxi network, set to launch in Austin, Texas, in June 2025, are also under scrutiny. Langan expressed doubts about the safety and efficacy of Tesla’s autonomous driving technology, which relies heavily on cameras and software rather than the more reliable LIDAR systems used by competitors like Waymo. He stated, "We remain skeptical of a safe & successful Austin Cybercab launch given limited unsupervised testing & their vision-only approach." He warned that anything short of a fully operational ride-hailing service by June would likely disappoint investors.
Despite these challenges, there was a slight glimmer of hope for Tesla investors on April 1, 2025, when shares climbed 6.2% ahead of the company's first-quarter production and delivery results, which are expected to be released soon. However, analysts remain cautious, predicting that deliveries may rise by less than 2% year-over-year, a stark contrast to previous quarters. In fact, estimates suggest that Tesla could deliver between 355,000 and 365,000 vehicles, a decrease from the previous quarter’s 495,570.
Further complicating matters, Tesla's sales in Europe have reportedly dropped significantly, with France experiencing a staggering 41% decline in the first quarter compared to the previous year. This downturn is exacerbated by the political backlash against Musk and his administration ties, which Wedbush analysts noted is “clearly at play and a major factor” in Tesla's quarterly delivery numbers.
In March 2025, however, the refreshed Model Y emerged as a bestseller in China, with over 43,000 units sold, marking it as the best-selling battery EV in the country for that month. This success may offer a temporary reprieve from the broader sales decline. Yet, as analysts parse through the upcoming delivery data, they anticipate continued volatility in Tesla's stock. The impact of Musk's political involvement and the strategic decisions surrounding new model launches will likely shape the company’s performance in the coming quarters.
As Tesla prepares to unveil its first-quarter results, the market watches closely. The company delivered approximately 387,000 units in the same quarter last year, and expectations are set for a year-over-year decline. With analyst estimates dropping, it remains to be seen whether Tesla can navigate through these turbulent waters or if the challenges will lead to further declines.
In summary, Tesla's future appears uncertain as it grapples with declining sales, political controversies, and high investor expectations. The upcoming delivery figures will be critical in determining the company's trajectory and whether it can regain the confidence of its investors in a market that is increasingly skeptical of its growth potential.
