Tesla’s fundamentals are expected to face challenges in 2025, according to Investing.com — wells fargo (NYSE:) Analysts reiterated in a note Wednesday that they are underweight the stock and have a $125 price target.
The bank said that despite a 63% share price increase in 2024, the electric vehicle giant’s “fundamentals are weak and the repeal of the IRA is a significant risk to demand and profits in 2025.” “It will be.”
Wells Fargo highlights that Tesla’s (NASDAQ:) 2024 vehicle deliveries were down 1% year-over-year, despite price cuts of more than 5%.
They predict that this negative sales trend will continue into 2025 due to “reduced profits due to price cuts, possible US discontinuation of IRA 30D/45W, continued competition in China, and cannibalization with Model 2.5.” I’m predicting it.
Analysts have also expressed doubts about the Model Y’s ability to counter this trend of refreshes and new releases.
A significant concern being raised is the valuation resulting from Tesla’s CyberCab and Optimus projects, estimated at approximately $700 billion.
Wells Fargo compares this to Waymo, which is valued at $45 billion and already offers more than 150,000 trips a week. The bank indicated that regulatory and safety setbacks could have a significant impact on Tesla’s credibility and reputation in this space.
The potential elimination of the $7,500 IRA tax credit also poses a significant risk to demand and profits, which is said to effectively increase Tesla’s U.S. price by about 12%. Analysts estimate Tesla’s third-quarter auto EBIT to be about $3,600 per vehicle, indicating it is susceptible to price cuts.
Additionally, Wells Fargo noted that Tesla sales in Germany fell 41% year-over-year due to cuts in EV incentives, highlighting the potential impact of similar cuts in the U.S. and Europe.
Wells Fargo also cited an ongoing price war in which Tesla is expected to cut prices by about 7% in 2024.
