Written by Cláudio Afonso | LinkedIn | X
Wells Fargo on Thursday cut its price target on Tesla to $130 from $135, citing a “shocking” year-to-date decline in the electric vehicle (EV) maker’s European sales and “concerns about political backlash from Elon’s Trump support.”
Tesla shares have plunged 40% so far this year while sales in Europe fell -45% in January and 41% in the top 9 European markets in February The firm also noted that sales in China are 14% lower adding that S&P estimates that US sales fell 11% in January.
Based on Tesla’s closing price on Thursday of $240, the firm expects the stock to drop 46% further to $130.
“We’ve repeatedly flagged the weak core biz fundamental since our March ‘24 downgrade. Shocking YTD EU sales have finally shifted focus to fundamentals,” analysts Colin Langan and Kosta Tasoulis wrote in a note.
Wells Fargo maintained an “underweight” rating on Tesla shares.
“We initially dismissed concerns about political backlash from Elon’s Trump support, as consumers often act differently than they talk; however, reports of protests & vandalism raise the stakes for potential buyers,” the analysts added.
Wells Fargo also warned of downside risks for Tesla’s full-year growth, predicting a 7% year-over-year decline in 2025 vehicle deliveries. The firm expects a 27% quarter-on-quarter drop in Q1 deliveries to 360,000 units, with a recovery to 450,000 in Q2, helped by price cuts and the launch of a lower-cost “Model 2.5.”
Tesla plans to produce a lower-cost version of its Model Y at its Shanghai factory in an effort to regain market share in China, its second-largest market, Reuters reported on Friday.
The new model, developed under the codename “E41,” will be smaller and at least 20% cheaper to manufacture than the refreshed Model Y launched in late 2024, according to three people familiar with the matter.
It will be built using existing production lines, with mass production set to begin in 2026 at Tesla’s largest factory by output, two of the sources said.
“Despite the 40% YTD decline, we still see >40% downside,” the analysts wrote. “If fundamentals matter, the momentum finally weakening is consensus exit fast.”
Tesla’s plant manager of the Giga Berlin factory ruled out on Thursday any production stoppages to German media staff reductions, or short-time work at the facility as the company continues to ramp up the weekly production rate of the refreshed Model Y.
In China, the company has registered its best week of the year between March 3 and 9 with 13,800 vehicles insured — doubling the figures from two weeks earlier as Model Y ramp up continues.
European registrations have rebounded in the first two weeks of March. Between March 1 and 12, Tesla registered 819 electric vehicles in Spain, positioning it to surpass February’s total before mid-month.
