TLDR:
- Tesla stock dropped 3.4% Thursday after soaring 22.7% on Wednesday following Trump’s 90-day tariff pause
- Mizuho cut Tesla’s price target from $430 to $375 while maintaining an Outperform rating
- Car industry still faces 25% tariffs on imported vehicles with more tariffs on parts coming later
- Tesla’s China sales declined 11% in March, selling 78,828 units
- Tesla is in talks with India for investment opportunities as the country limits market access for Chinese competitor BYD
Tesla stock fell in early Thursday trading after experiencing its second-best day ever. The electric vehicle maker’s shares dropped 3.4% in premarket trading to $263.15, following Wednesday’s massive 22.7% gain.
The Wednesday rally came after President Donald Trump announced a 90-day pause on some import tariffs. This gave investors temporary relief from concerns about economic growth and company profits.
However, the car industry still faces significant challenges. The 25% tariffs on imported cars remain in place, with the U.S. importing about half of all new vehicles sold.
Additional tariffs of up to 25% on car parts are still coming later, according to the White House. This could squeeze profit margins for automakers like Tesla.
Another concern is that the auto industry might be excluded from upcoming tariff negotiations. This uncertainty continues to hang over Tesla and other car manufacturers.
China Relationship Crucial for Tesla
Trump didn’t pause tariffs on China, which has implemented retaliatory measures against the U.S. This is particularly important for Tesla, whose most productive car plant is located in Shanghai.
China accounts for more than 20% of Tesla’s 2024 sales. It’s also the home of BYD, Tesla’s strongest competitor in the electric vehicle market.
Recent data shows Tesla’s presence in China faced headwinds in March. The company reported an 11% decline in Chinese market sales, selling 78,828 units according to the China Passenger Car Association.
Tesla also exported 4,701 vehicles from China during this period. The company’s performance in this key market is critical to its overall growth strategy.
Analyst Outlook Tempered
Financial analysts at Mizuho Securities have adjusted their expectations for Tesla. On Thursday, they cut Tesla’s price target from $430 to $375, though they maintained their Outperform rating.
Mizuho revised Tesla’s first-quarter 2025 estimates to $20.53 billion in revenue and $0.51 in earnings per share (EPS). These figures are down from previous projections of $22.30 billion and $0.57.
The firm also reduced full-year 2025 forecasts to $101.03 billion in revenue and $2.60 in EPS. This represents a decrease from earlier expectations of $108.03 billion and $2.89.
Looking further ahead, Mizuho scaled back 2026 delivery projections from 2.30 million units to 2.00 million. The consensus forecast stands at 2.18 million vehicles.
For 2027, the firm now expects Tesla to deliver 2.43 million units, down from the previous estimate of 2.73 million. The market consensus is 2.50 million.
Despite these reductions, Mizuho emphasized Tesla’s continued leadership in the U.S. electric vehicle market. However, they acknowledged potential market share challenges in the European Union and China as competition intensifies.
Tesla is also exploring new opportunities in India. The company is in talks with Indian officials as the country seeks to attract investments from the American electric vehicle manufacturer.
At the same time, India is limiting market access for Chinese competitor BYD. This reflects India’s cautious approach toward Chinese investments, according to Commerce Minister Piyush Goyal.
Tesla’s stock currently trades at approximately 52% below its 52-week high. With a price-to-earnings ratio of 118.73 and a beta of 2.58, some analysts suggest the stock may be slightly overvalued at current levels.
Mizuho’s new price target implies a forward price-to-sales ratio of roughly 10.6 times the firm’s 2026 earnings projection. This valuation reflects both optimism about Tesla’s long-term potential and awareness of near-term challenges.
Meanwhile, Tesla CEO Elon Musk recently pushed back against comments from Peter Navarro, a top trade adviser to President Trump. Navarro had labeled Musk a “car assembler,” a characterization Musk called “demonstrably false” on social media.
This exchange is part of a broader debate on tariffs, with Musk advocating for zero tariffs between the U.S. and Europe. The outcome of these discussions could have far-reaching implications for Tesla’s global manufacturing and sales strategy.
