Key Takeaways
- Tesla’s sales plunged in the first quarter, with key markets like California and Europe seeing sharp declines.
- BYD has overtaken Tesla in China, intensifying competitive pressures in the world’s largest EV market.
- Analysts expect Elon Musk’s carmaker to report weak global sales for the first quarter.
Tesla’s rocky 2025 has rattled investors, with TSLA now ranked as the worst-performing stock in the S&P 500 so far this year.
Weakened demand, increasing competition in China, and Elon Musk’s growing political controversies have fueled the sell-off, leaving investors questioning Tesla’s long-term trajectory.
As analysts slash delivery forecasts and debate its future valuation, the next five years could redefine Tesla’s standing in the EV industry.
Tesla’s Weak Sales Performance Continues in April
Tesla’s sales slumped in Spain in April, highlighting a broader European drop. The EV maker delivered just 571 vehicles in April—a 36% year-over-year drop.
While the Spanish EV market has grown, Tesla is losing ground not only there but also across Europe . Its sales fell by 37% in the first four months of 2025, even as overall electric vehicle demand surged 28%.
Some markets fared worse than others. In Sweden, Tesla registrations plummeted by 81%, hitting their lowest levels in nearly three years.
Mizuho Analysts point to a mix of factors, including shifting political perceptions around Elon Musk, growing consumer preference for Chinese brands like BYD, and frustration over global economic volatility partly linked to U.S. tariffs.
The downturn isn’t limited to Europe. U.S. sales have also dipped , leading Tesla to roll out incentives for its new Model Y in an attempt to reignite buyer interest.
With core markets cooling, Tesla is turning its attention to less-saturated regions, exploring opportunities in India and Saudi Arabia despite the infrastructure challenges that lie ahead.
TSLA Stock Underperforms Rivals
Tesla stock fell by 1.8% to $275.13 in premarket trading on Tuesday, trailing the broader market as investors digested Ford’s earnings. The S&P 500 and Dow Jones futures were down by 0.3% and by 0.4%, respectively.
Ford reported a first-quarter update Monday, suspending its full-year outlook and estimating a gross tariff impact of $2.5 billion and a net hit of $1.5 billion—about 20% of its prior $7.8 billion operating profit guidance.
General Motors trimmed its 2025 profit forecast by nearly 25%, now expecting $11.3 billion at the midpoint versus the earlier $14.7 billion.
GM and Stellantis import roughly 40% of U.S. vehicle sales, while Ford imports about 20%. Stellantis, which also dropped its guidance , previously forecast mid-single-digit operating margins and sales growth.
Tesla, which assembles all U.S. units domestically, has less direct tariff exposure but still faces parts-related impacts. CEO Elon Musk noted that tariffs remain tough with “margins still low,” highlighting localized supply chains in the U.S., Europe, and China.
Tesla shares are down by 31% year-to-date. Stellantis and GM have fallen 28% and 15%, respectively, while Ford gained 3%.
Robotaxi’s Impact on Tesla Stock
Tesla shares have jumped by 26% over the past two weeks as investor confidence rebounds , driven by CEO Elon Musk’s renewed focus on company growth following a politically turbulent stretch.
During the latest earnings call , Musk emphasized long-term goals, including a new affordable EV launch in June 2025 and volume robotaxi production by 2026, helping offset concerns over weak first-quarter revenue and margin pressure.
Despite strength in North America and a largely USMCA-compliant supply chain, Tesla faces challenges abroad—especially in China’s highly competitive EV market and amid lukewarm sentiment in Europe and Canada, partially due to Musk’s polarizing political views.
According to analysts , much of the current investor enthusiasm hinges on Tesla’s autonomous driving ambitions. Musk has promised a robotaxi prototype rollout in Austin this June and mass production of 2 million units annually starting in 2026.
However, the vehicles are still being tested and are not on public roads.
Meanwhile, rival Waymo is now offering 200,000 weekly Level 4 autonomous rides across U.S. cities, including Austin, putting Tesla significantly behind in the race for self-driving dominance.
Tesla’s Rocky Q1 2025
Tesla’s first-quarter earnings fell well below expectations, with earnings-per-share (EPS) sinking 40% to $0.27. Revenue also missed forecasts, falling 9% to $19.3 billion versus analysts’ expectations of $21.3 billion.
Net income plummeted 71% year-over-year to $409 million, down from $1.39 billion. Revenue also missed the Bloomberg-cited consensus of $21.43 billion. Adjusted EPS dropped from $0.45 to $0.27, far short of the $0.44 expected.
Tesla blamed the declines on fewer vehicle deliveries, impacted by Model Y updates across all four factories, and lower average selling prices.
Total production dropped 16% year-over-year to 362,615 units, while deliveries fell 13% to 336,681.
Despite weaker cash flow, Tesla’s cash and cash equivalents grew 38% year-over-year to $36.996 billion. However, cash flow fell to $664 million, down sharply from $2.03 billion in Q4, even as capital spending plunged to $1.492 billion from $2.78 billion a year earlier.
Concerns on $1.4 Billion Capital Expenditure Discrepancy
Tesla’s $1.4 billion gap between capital expenditures and asset valuations has raised concerns about its financial reporting.
First reported by the Financial Times , the discrepancy could indicate internal control issues. However, accounting experts cite plausible explanations, such as foreign currency fluctuations or the disposal of fully depreciated assets.
Tesla CFO Vaibhav Taneja said the company’s capital expenditures are primarily directed toward AI-related initiatives expected to deliver immediate benefits.
This isn’t the first time Tesla’s accounting practices have faced scrutiny. However, experts suggest the gap might not be a red flag.
Despite raising $3.9 billion in new debt last year, Tesla’s $36.5 billion cash reserves and investments in AI, robotaxi technology, and humanoid robots could justify its spending strategy.
Tesla Hit as Musk Boycott Gathers Steam
Elon Musk’s controversial role in reshaping U.S. politics has sparked protests and calls to boycott Tesla, coinciding with a troubling sales drop for the company.
Tesla’s January sales were significantly lower compared to the same time last year, with California—one of its key markets—seeing nearly a 12% decrease in registrations .
In Europe, Tesla faced even steeper declines, including a 75% drop in Spain and 60% in Germany.
While a global sales slowdown is affecting the entire auto industry, Tesla’s drop has raised questions about whether Musk’s political actions are playing a role.
In liberal regions, where buyers tend to be more politically conscious, there’s a stronger rejection of Musk’s embrace of far-right politics .
U.S. sales data also shows a stark contrast, with repeat buying down in Democratic-led States but slightly up in Republican ones, leading to speculation about Musk’s influence on consumer behavior.
On Feb. 15, protesters gathered outside Tesla showrooms in the U.S. to demand a boycott, with the #boycottTesla movement gaining traction on social media, even on Musk-owned X.
Increasing Competition From China
Tesla CEO Elon Musk stated that the company is doing well in China , with its Shanghai factory running at full capacity. However, a drop in market share signals the need for proactive changes.
To address this, Tesla must innovate with product designs and enhance after-sales services to prevent the decline from becoming permanent.
Since China opened to global trade in 1978, foreign automakers like Volkswagen and GM have established strong positions . Tesla, entering in 2019, benefited from China’s push for electric vehicles (EVs), with the government investing heavily in the sector.
However, BYD now holds 35% of the market, while Tesla’s share fell to 7.8%. Competition has further intensified with affordable models like BYD’s Seagull.
According to Christopher Tang , a professor and the holder of the Carter Chair in Business Administration at the UCLA Anderson School of Management, to stay competitive, Tesla needs to adjust its strategy.
This includes reconsidering its minimalist design, introducing physical buttons preferred by Chinese consumers, and enhancing its infotainment systems with AI-driven features like voice control and smartphone integration.
For Tang, Tesla also needs to expand its product lineup. Since launching the Model 3 and Model Y, Tesla has not introduced new models, while competitors are releasing over 100 new vehicles in 2024.
Expanding product variety and improving after-sales services, like offering lower insurance premiums for good drivers, could strengthen customer loyalty.
TSLA Stock Price in Five Years
Despite all the issues Tesla faces, several analysts and investors are sure it has a bright future.
Cathie Wood’s Ark Invest updated its Tesla (TSLA) stock price target to $2,600 by 2029, while Morningstar Seth Goldstein maintained a $210 “fair value estimate” for Tesla, labeling it “overvalued” at current levels.
Despite this, Morningstar’s forecast suggests that if its assumptions hold, the stock will align with its estimate within three years, indicating cautious optimism around Tesla’s long-term prospects.
TipRanks shows a ‘hold’ rating on Tesla based on feedback from 34 analysts. Of these, 11 recommended ‘buy,’ nine said ‘sell,’ and 14 advised holding.
The average 2025 price target was $232.64, though projections varied significantly. Some analysts forecasted a high of $400 and others as low as $24.86.
TradingView also predicted Tesla could trade at $245.11 in 2025, based on 43 analyst targets, with a range from $85 to $400. This range reflects uncertainty over Tesla’s next moves.
According to GovCapital , Tesla’s long-term future looks promising. It predicted a $1,534.78 average stock price by 2029, potentially surpassing $1,700 by year-end.
Analysts like Wedbush’s Dan Ives , who maintains an ‘outperform’ rating and a $400 target, believe Musk’s influence in the Trump administration could provide Tesla with a strategic advantage.
On the other hand, UBS’s Joseph Spak remains more cautious, maintaining a ‘sell’ rating with a price target of $226. Spak highlighted Tesla’s stock’s momentum-driven nature.
Jefferies’ Philippe Houchois , with a more reserved view, set a $300 target. The expert cited the competitive challenges Tesla faces in non-automotive business segments like autonomous vehicles and robotics.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
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