Written by Cláudio Afonso | LinkedIn | X
Wells Fargo published on Tuesday a new research note on Tesla naming the stock the firm’s ‘New Tactical Short Idea’ as it reiterates its underweight rating and $130 price target implying a downside of 49.8%.
“We have an Underweight rating on TSLA. We continue to see delivery growth declines & diminished return on price cuts driving a ~280bps y/y decline in 2025 auto Gross Maring exc[luding] credits,” Wells Fargo analysts wrote while noting that they “remain skeptical on the CyberCab Deployment in Austin.”
Tesla’s chief Elon Musk reaffirmed on Monday the company is targeting June to start “carrying passengers” in unsupervised full self-driving Teslas adding that other cities will join by the year end.
“As I’ve said previously, unsupervised full self-driving Teslas will be carrying passengers in Austin in June and many cities in America by end of year,” Musk wrote on X.
“This will enable passenger cars to increase in utility by roughly half an order of magnitude overnight with a software update,” he added.
Wells Fargo cited concerns with “recent moderating growth trends across all three key regions (US, EU, China)” adding a “few levers remain to increase volumes outside of pricing & model refreshes” and naming recent “offer aggressive financing promotions to salvage deliveries.”
Tesla said on Monday is rolling out new financing incentives in China as it ramps up sales of its refreshed Model Y, offering a three-year zero-interest loan option across the entire lineup for the first time. The company is also extending incentives to its Model 3 lineup raising concerns on vehicle margins’ impact.
“Price actions thus far continue to indicate diminishing returns on volume,” Wells Fargo stated. “QTD through February 2025, deliveries are trending 40% & 14% lower in Europe & China, respectively, while NA is trending 3% lower.”
Official figures showed on Tuesday that Tesla sales in France have fallen 36.8% in March to 3,157 vehicles while in Sweden the company saw its sales drop 63.9% year over year to 1,929 units.
In the Netherlands, sales dropped to 3,443 vehicles in the first quarter, down from 6,842 registered in the first three months of 2024.
Wells Fargo reminded “Tesla has promised to deliver its more affordable model” in the second quarter of the year. “Details on the vehicle are limited other than that the model will be priced at >$30K with the $7.5K IRA credit, which implies ~$5K lower than the M3,” the analysts wrote.
“While this model with the MY refresh is expected to drive a recovery in deliveries into Q2, the lack of details so close to the reveal makes us cautious on the affordable model. Historically, the new model cannibalizes ~16% of the related model volume.
Wells Fargo sees “further headwinds” in the second half of the year as $7,000 IRA EV buyer credits “likely get cut” by President Donald Trump and the U.S. Administration.
“We see disappointing fundamentals driven by lower deliveries & px cuts driving ~25% y/y EPS deterioration in 2025,” the firm noted. “Austin Cybercab Deployment Is Crucial We remain skeptical of a safe & successful Austin Cybercab launch given limited unsupervised testing & their vision-only approach. “
“We est. only ~33% of the price is core autos, so any Cybercab concerns would imply even further downside to the current stock price of $259. TSLA Needs Some Magic,” the firm concluded.
As of the time of writing, Tesla shares are trading 1.80% higher at $264 during Tuesday’s pre-market session.
