ii view: Tesla stock volatile after tariffs, Musk and missed forecasts
More than just a car company, but with the controversial Elon Musk at the helm. We assess prospects for this Magnificent Seven company.
3rd April 2025 11:26
by Keith Bowman from interactive investor
First-quarter deliveries and production to 31 March
- Deliveries of 336,681 vehicles, down from 495,580 in the previous quarter
- Total production of 362,615 vehicles, down from 459,445 vehicles in the previous quarter
ii round-up:
Tesla Inc (NASDAQ:TSLA) has detailed quarterly vehicle deliveries (the nearest number it gives to sales) that comfortably missed Wall Street forecasts and which were likely impacted by chief executive Elon Musk’s move into politics within the Trump administration.
First-quarter deliveries of 336,681 vehicles was down from 495,580 in the previous quarter and 13% adrift of the comparable period in 2024. Analysts had pencilled in 370,000. Having helped Donald Trump win the US presidential election, Elon Musk has subsequently headed the Department Of Government Efficiency (DOGE), tasked with cutting US public sector jobs.
Tesla shares, which peaked at $488 in December, finished last night's trading session at under $283. They fell as low as $260 in aftermarket trading, but improved in pre-market trade Thursday to $266. Shares in European car giant Volkswagen AG (XETRA:VOW) are up around 5% year-to-date. The Nasdaq 100 had fallen by almost 7% in 2025 ahead of Trump's tariff announcement.
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Tesla’s Model 3 and newly introduced Model Y accounted for the bulk of the quarterly deliveries at 323,800. The new Model Y, nicknamed ‘Juniper’, now retails in the US for just under $30,000 (£23,000), below the Model 3’s starting price of around $39,000.
Other deliveries during the quarter of 12,881 included Tesla’s angular sharped Cybertruck. Total group production of 362,615 vehicles fell from the fourth quarter’s 459,445 vehicles.
Tesla has factories making vehicles in both California and Texas. Rival General Motors Co (NYSE:GM) has moved some of its operations to Mexico.
Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares post the update. The broker flagged a fair value estimate of $410 per share. First-quarter results are scheduled for 22 April.
ii view:
Set up in 2003 by Martin Eberhard and Marc Tarpenning, Tesla today employs around 125,000 people. Automotive demand accounted for almost 90% of revenues in 2024. Energy generation and storage products and including solar panels made up the balance. Geographically, the US dominates with close to half of all group sales. That’s followed by China at just over a fifth, with other markets and including the UK accounting for the balance of close to a third.
For investors, Elon Musk’s involvement in politics may have deterred many potential customers. Rivals such as Ford Motor Co (NYSE:F), Bayerische Motoren Werke AG (XETRA:BMW) and Mercedes-Benz Group AG (XETRA:MBG) are all now actively pushing their own electric vehicle (EV) models. Recently announced US trade tariffs may impact given the import of components from overseas, while a forecast price-to-net asset value (NAV) of around 12 times compares to estimates for rivals at under two times, suggesting the shares are not obviously cheap.
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On the upside, developments in products such as self-driving software and a Robotaxi could potentially generate significant profits. Innovation in manufacturing techniques means it can cast one major bodywork item instead of welding together many, which reduces costs and therefore potential vehicle sale prices. Climate change concerns remain a positive for the EV sector, while Elon Musk could now step away from politics, even appointing another head to run Tesla.
On balance, competition within the auto industry is intense, with political involvement offering an additional headwind. That said, Tesla is innovative, and products and including humanoid robots likely mean investors happy with greater risk will continue to actively trade what is a volatile stock.
Positives:
- Climate change concerns persist
- Expanding network of superfast charging stations
Negatives:
- Rising competition from other manufacturers
- Potential regulatory hurdles for self-driving vehicles
The average rating of stock market analysts:
Strong hold
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