Tesla Inc (NASDAQ:TSLA) shares fell another 8.7% to about $240 on Monday morning amid continued investor concerns about a slowdown in vehicle global sales and CEO Elon Musk’s close ties to the Trump administration.
Analysts at UBS lowered their price target on Tesla to $225 from $259 citing concerns over delivery volumes, margin pressures, and softer demand.
Analysts reduced their first quarter 2025 delivery forecast to 367,000 units, down 26% quarter-over-quarter and 5% year-over-year, reflecting what they believe to be a slower run rate despite an anticipated end-of-quarter push likely driven by promotions.
This new forecast is 13% below the Wall Street consensus.
The UBS analysts expect Tesla’s auto gross margin excluding credits to fall to 10.3% in Q1 2025, compared to 13.6% in Q4 2024 and 16.4% in Q1 2024, below the “aggressive” consensus of 13.5%.
They cited reduced deliveries and increased promotional activity as key reasons for this weaker margin outlook.
As a result, UBS lowered its first quarter earnings per share (EPS) forecast to $0.37, 28% below the consensus.
Orders 'somewhat muted'
For full-year 2025, UBS reduced its delivery forecast to approximately 1.7 million units, representing a 5% year-over-year decline and 14% below consensus expectations of roughly 10% growth.
“While we do expect the Model Y refresh (Juniper) to help, we believe orders are somewhat muted,” they noted.
“For instance, the Tesla China website shows a two to four week delivery timeframe for the new Model Y. Further, we believe that the refresh faces competition from the old Model Y which may have more promotional activity (globally) and many competitive options in China where the refresh is evolutionary.”
The analysts expect some margin recovery growth in Q2 as Tesla moves past downtime issues, but see ongoing pricing pressures on older Model Y models limiting the rebound.
UBS believes Tesla’s upcoming lower-cost vehicle, expected to start production around June, could boost volumes but may also reduce demand for the Model 3 and Model Y. They expects the new vehicle’s pricing to be $5,000 to $7,000 below the Model 3/Y, and they believe Tesla may struggle to offset this price reduction with sufficient cost savings, resulting in lower margins.
UBS repeated its ‘Sell’ rating on Tesla.
“While the long-term story at TSLA has shifted to AI (robo-taxis and humanoid robots) and progress there continues, we believe these are longer dated opportunities that the premium multiple already (more than) considers,” analysts wrote.