Wall Street is betting that Tesla’s 2025 sales will miss Elon Musk’s target
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Wall Street bankers expect Tesla vehicle sales to grow very slowly this year as Donald Trump tries to undermine Biden’s climate policies that favor electric vehicles.
Tesla is set to sell 2.07mn vehicles this year, up 16 percent on 2024, according to analyst forecasts compiled by FactSet. That compares with last year, when the group reported its first decline since 2011, but well below Musk’s target of 20 to 30 percent in October and below the 40 percent annual growth rate of the past two years.
The figures highlight the challenges facing Tesla, which has vowed to roll back policies that boosted US EV sales. Last week, an executive order stated that the White House intends to “remove undue subsidies and other government-sponsored market distortions.”
“Trump 2.0 opposition to EV incentives hits 2025 volume,” said Morgan Stanley analyst Adam Jonas.
Tesla, which reports fourth-quarter earnings on Wednesday, will be especially hard hit if Trump repeals the $7,500 tax credit for EV buyers. Barclays analyst Dan Levy estimated that about two-thirds of Tesla’s US sales would benefit from the credits.
Changes to EV subsidies may take effect from 2026. Some analysts say Tesla’s sales figures could be boosted by buyers rushing to complete the sale before then. Levy predicted “significant EV pre-purchases” in the second half of 2025 before volumes taper next year; Other analysts thought the pre-purchases were boosting Tesla’s sales.
Some analysts questioned how big the pre-purchase would be; BNP Paribas Exane estimates that this year’s volume growth could be as low as 12 percent.
Tesla investors are also concerned about the broader “pressure on the EV market, Chinese competition (and) declining Cybertruck volumes,” Jonas said.
Overall, US EV sales growth slowed last year due to higher prices and a lack of new models. EV market share is 8 percent, compared to 7.6 percent in 2023.
Meanwhile, Trump’s trade policy toward China could exacerbate tensions with Tesla’s second-largest market.
Musk’s strong support for Trump and meddling in British, Italian and German politics have turned off some potential customers. According to ACA, the European auto industry body, Tesla’s EU sales of EVs will fall by 13 percent year-on-year in 2024.
“Tesla was the market leader, and still is in many ways, but people are losing out,” said the founder of Electrifying.com, an EV buying advice site.
Tesla’s aging portfolio is another cause for concern for investors. In the year The only new model released in 2020 since the Model Y sport utility vehicle is the Cybertruck, which starts at $82,000. Between 9,000 and 12,000 Rooms quarter.
This year, Tesla is ramping up the Model Y, but last year canceled plans for the $25,000 vehicle, dubbed the new Model 2 and known internally as the NV91. Musk has been vague about plans for a successor to the NV91, leading some analysts to speculate that he may announce a “model 2.5” this year.
The company has hinted to investors that the new model will arrive in the second half of this year; Many speculate that more details could emerge this week.
Mook previously predicted total Tesla sales to top 20mn a year. But even with a new affordable offer, RBC Capital Markets analyst Tom Narayan, this is impossible. Tesla expects to eventually achieve annual sales of at least 6mn.
Despite the threat of stuttering sales growth, analysts say Tesla’s future looks bright – thanks in large part to artificial intelligence. Mask is a game where advances in AI technology have made it possible to build autonomous “Robotaxis” ships.
“Selling cars is a small part of that,” Narayan said, adding that Tesla’s new revenue stream will come in part from autonomous driving software.
Tesla is also building a humanoid robot that Musk says will be “the biggest product of any kind” and should boost the company’s valuation to $25tn from today’s market capitalization of $1.3tn.
“A ‘regulation-friendly’ Trump White House could help unlock Tesla’s stock price as the autonomous (car) timeline could accelerate,” said Wedbush analyst Daniel Ives.
“There will be an anti-EV focus around emission standards and eliminating the $7,500 tax credits,” but it will be balanced by “focusing on AI innovation that provides a very favorable tailwind,” he said.