Barclays analyst Dan Levy reaffirmed on Thursday the firm’s Equalweight rating on Tesla‘s stock, citing “increasingly weaker fundamentals.”
The analyst leans bearish on the Elon Musk-led company as it reiterates the $275 price target set last April.
The target implies a 14.5% downside, based on Wednesday’s close at $321.67. The stock has soared 29.4% in the past twelve months. However, year to date, it lost 20.4% of its value.
In a new research note, the analyst said that Barclays is expecting second quarter auto margin — excluding regulatory credits — to be improved when compared to the first quarter.
From January to March, Tesla‘s gross margin was 12.5%, down by 3.9% from the first quarter of 2024 and by 1.1% from the previous quarter. According to Levy, it will “likely remain depressed” compared to previous years.
The analyst highlighted a “soft” first half volume, as “Tesla now is on track for a meaningful decline in 2025.” Barclays forecasts 2025 deliveries to fall 10%.
In the first half of 2025, Tesla delivered 720,803 vehicles globally. The figures showed a 13.3% drop when compared to the 831,766 units recorded a year ago.
The EV maker delivered nearly 1.79 million vehicles in 2024, which means Barclays estimates the brand to deliver 890,000 units in the second half and to have delivered about 1.61 million units by year-end.
Two new variants were revealed on Wednesday via China’s Ministry of Industry and Information Technology (MIIT), including a longer range trim of the Model 3 — named Model3+ — and the six seater Model Y L, with a slightly longer wheelbase.
Both variants are expected to be launched in the Chinese market this Fall. However, it remains unclear if/when the brand will start deliveries in other markets.
“The fundamental set-up is a sharp contrast to the elevated hopes from late 2024,” Levy noted, adding that “whereas 2o25 consensus EPS (earnings per share) was over $3.20 into the beginning of the year, it is now down to $1.84.”
The analyst considers that “it’s certainly possible that a weak gross margin or broader soft commentary on fundamentals could be a splash of cold water on the stock.”
Levy recognizes, however, that the upcoming earnings call — on July 23 — is “an opportunity for Tesla‘s robotaxi/AV (autonomous vehicle) narrative to shine.”
According to the analyst, the robotaxi has been “the front and center of Tesla stock’s strenght” and he “could see Elon Musk potentially discussing fleet growth targets or expansion plans.”
The company started offering paid fully driverless rides in Austin late last month, with an initial fleet of about 10 Model Ys powered by FSD (Full Self-Driving), offering invitations to a select group of influencers.
Earlier this week, Tesla expanded the geofenced area of its robotaxi service in Austin, Texas, doubling the original service zone introduced in late June.
Musk had also stated on X that the company intends to enter San Francisco “in a month or two.”
Asked about the expansion of the service to the bay area, Tesla‘s chief executive wrote on X that the company is still waiting on regulatory approvals.
Lastly, the analyst noted that “Tesla‘s forthcoming low-cost model seemingly missed its target,” as the company intended to start production in the first half of 2025.
In the last shareholder deck, the company said that “plans for new vehicles, including more affordable models, remain on track for start of production in the first half of 2025.”
However, no more details have been revealed by the brand.
Barclays believes that the EV maker may “delay the launch of the low-cost model to the fourth quarter, which could be perceived negatively.”
Levy said that Tesla is “likely to focus” on a third quarter “pre-buy in advance of the Sep. 30 expiration of the US EV tax credit.”
Trump’s “big, beautiful bill,” in which he plans to cut on tax credits for clean energy, was approved by the US House of Representatives in June and moved to the Senate.
By the end of the month, the Senate Republicans released a revised version of the bill, proposing to eliminate federal incentives for EVs and clean energy technologies by the end of September.
The bill passed and was signed by the President on July 4.
On Thursday, Tesla posted on X that it is testing its FSD in Sydney, Australia, after having started with the city of Melbourne. It adds to the list of several European cities where it is also waiting for authorities to approve the system.
However, in Australia, the system faces “no regulatory blocks,” the country chief Thom Drew said in a recent interview.
