Cantor Fitzgerald analyst Andres Sheppard reiterated on Monday the firm’s Overweight rating on Tesla’s stock, assessing the impact of newly imposed U.S. tariffs on vehicle and auto parts imports on the Elon Musk-led company.
In a new research note, the analyst highlighted that “the company has prioritized domestic sourcing and maintains a high degree of vertical integration”, which leads to “minimizing exposure to import tariffs.”
“Thus, we see it as better positioned and less impacted relative to other OEMs,” Sheppard stated. Tesla’s U.S.-sold vehicle parts are 61% sourced from the United States.
It is followed by 22% from Mexico, 7% from Canada, and 3% from China, research from Bernstein showed in late March as reported by Reuters.
On March 19, the firm had released a note following a visit to Tesla’s Gigafactory and AI Data Centers in Austin, as the company is preparing to launch its Robotaxi in June.
By then, Cantor reaffirmed its $425 12-month price target on Tesla but cut back its 2025 deliveries estimate to about 1.9 million units (from 2 million) and 2026 deliveries estimate around 2.33 million vehicles (previously 2.39 million).
The analyst cited key risks to be tariffs, “competition from Chinese OEMs,” “regulatory approval for FSD and Robotaxi,” and “slowdown in EV demand,” and “removal of EV tax credit.” As of the time of writing, Tesla shares are trading 2.5% higher at $259.
A study from Cars.com ranked Tesla’s Model Y in 2024 as the most American-made vehicle for the third year in a row. It ranks models based on factors such as assembly location, parts content, engine and transmission origin, and the size of the U.S. manufacturing workforce.
Cantor analyst Andres Sheppard said on Monday that “however, we do expect some consumer backlash from Elon’s polarizing politics to affect demand, particularly in China and Europe, due to geopolitics.”
Tesla in China
In early April, Trump imposed tariffs ranging from 10% to 54% on imports from various countries, but paused the application of the duties last week for all except China, as negotiations began.
The 54% tariff on Chinese imports progressively increased to 145%, as the two largest economies in the world entered a heated tit-for-tat, with China also raising tariffs on U.S. goods to 125%, effective last Saturday.
Showing the first signs of impact, Tesla halted last Friday new orders for the Model S and Model X in China. However, Tesla’s Model 3 and Model Y are less affected in both China and the U.S. due to its supply chain being 95% localized.
In the first quarter, the company’s sales in China fell 22% year over year to 172,754 vehicles, despite the refreshed Model Y being the best-seller model in that period.
Tesla in Europe
Tesla’s sales in Europe have been falling since the start of the year, with countries like Germany and France seeing a drop of over 50%.
The expansion of Chinese brands in Europe and Elon Musk’s political actions are partly to blame. His involvement with Trump’s administration and European political discussions led to increased criticism of the company and attacks on Tesla’s vehicles and locations.
Earlier this Monday, White House economic adviser Kevin Hasset revealed on Fox Business that the U.S. is making “enormous progress” on tariff talks with the European Union.
Last week, ARK Invest’s CEO and CIO Cathie Wood reiterated the firm’s price target on Tesla of $2,600 in 2029, which implies the Elon Musk-led company to reach a market cap of over $8 trillion by 2029.
As the application of the 25% tariff on all vehicles and auto parts imported to the U.S. takes place, analysts expect vehicle sales to drop by millions, with higher prices for new and used cars.
With industry costs rising, BCG expects tariffs to increase industry costs by $110 billion to $160 billion annually. Goldman Sachs said on Monday it expects new car prices in the U.S. could go up by $2,000 to $4,000 in the next 6 to 12 months due to higher tariff costs.
