Analysts give second opinion on Tesla following White House event
Also, the Elon Musk-led automaker may be following through on a cheaper model
It's been another week for the auto industry and the analysts that cover it.
Tesla's White House stunt has analysts worried about its outlook. Citibank is banking on non-EV growth for a key Chinese Tesla rival, and Tesla may be gearing up for a new, affordable model in China. Andrew Harnik/Getty Images
"It's all computer!"
On March 11, the White House South Lawn turned into a makeshift outdoor Tesla (TSLA) showroom as President Donald Trump and Tesla CEO and Department of Government Efficiency head Elon Musk toured some of its EVs in front of the press.
The seemingly public display of affection towards Tesla came less than 24 hours after a Truth Social post in which the President denounced ongoing boycotts and protests against Tesla and stated that he planned to buy a Tesla vehicle to demonstrate his support.
One thing that is certain is that he is very impressed with Tesla's tech.
“Wow, that’s beautiful,” Trump said while settling into a red Model S. “This is a different panel than I’ve had; it’s all computer!”
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Though President Trump noted that Musk and Tesla were being "treated very unfairly by a very small group of people" during the "Tesla Summit," analysts at Wells Fargo and JP Morgan see the impact as much larger.
In a note published on March 12, JP Morgan auto analyst Ryan Brinkman didn't mince words and explicitly warned that Musk's politically charged behavior is responsible for Tesla's downfall.
"We struggle to think of anything analogous in the history of the automotive industry, in which a brand has lost so much value so quickly," Brinkman wrote.
In his note, he cut his price target from $135 to $120 and slashed his estimate for Q1 global deliveries from 444,000 vehicles to just 355,000. He pointed to one cause and one only.
"Mr. Musk's work with the Department of Government Efficiency has proven controversial domestically, and while as many members of the political right may be pleased as those on the left are displeased, the effect on Tesla sales seems nevertheless negative," he wrote.
Related: Tesla's White House swooning comes at a disappointing time
In a note on March 14, Wells Fargo analysts Colin Lang and Kosta Tasoulis mentioned similar concerns while they cut their Tesla price target from $135 to $130.
“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.
The Wells Fargo analysts also predicted a 7% year-over-year decline in 2025 vehicle deliveries, expecting a 27% quarter-on-quarter drop in Q1 deliveries to 360,000 units, with some recovery in Q2.
On the contrary, Morgan Stanley analysts wrote in a note on March 11 that Tesla shares had fallen because of "sales data, negative brand sentiment, and market de-grossing" but still saw a buying opportunity.
"Today, with the stock down 50%, our investor conversations are focused on management distraction, brand degradation, and lost auto sales," the MS analysts said. CFOTO/Future Publishing via Getty Images
Citibank banks on Tesla rival on non-EV growth
During Tesla's Q1 2024 earnings report, CEO Elon Musk declared the company an "AI, robotics company," adding that those who "don’t believe Tesla will solve autonomy should not be an investor in the company."
“We are excited about our autonomy road map; it is only a matter of time before we exceed the reliability of humans — we are really heading toward an EV, autonomous future,” Musk said. “In the future, gasoline cars that are not autonomous will be like riding a horse.”
On October 10, 2024, Tesla tripled down on its AI and robotic future at its "We, Robot" event.
In front of an audience of "believers," he unveiled the autonomous Tesla Cybercab, "Robovan," and the Optimus humanoid robots, which interacted with guests and served drinks at the bar.
