On Thursday, financial experts reduced their targets for Tesla, triggered by apprehensions that tariffs and import duties could cripple the larger auto sector. UBS downgraded Tesla's price objective to $190, predicting that the electric vehicle maker's vehicle deliveries will see an 11% reduction by 2025. Mizuho analysts echoed similar sentiments and decreased Tesla's target to $375, warning of an escalation in Tesla prices and erosion of its dwindling demand due to tariffs. An average analyst estimate rates Tesla's shares at about $327, nearly 30% above Thursday's closing price, as per Visible Alpha.
UBS stated in a commentary on Thursday, "While lower predictions for 2025 are more generally expected, we consider the total earnings outlook for Tesla to remain too high…" implying that share prices may show fluctuations but demonstrate a downward trend. Tesla's shares along with the larger market have fluctuated recently owing to changes in U.S. trade policy. CEO Elon Musk's cost-cutting endeavours have also played a role in the performance of Tesla's stock. Though the shares closed over 7% lower on Thursday, they were still up by over 40% compared to the previous year.
Despite the Trump administration's decision this week to lessen tariffs on several U.S. trading partners, Chinese goods, such as car batteries and their constituents, are still subjected to tariffs exceeding 100%. Moreover, a 25% import tax continues to be levied on cars, which could escalate prices, discourage buyers, and potentially hamper Tesla's 2025 U.S. revenue by 3.5%, as per Mizuho's estimates.
UBS commented, "While a decrease in mutual tariffs aids in curbing the risk of a recession/demand slump, we emphasize that the auto tariffs are sector-specific, not dictated by individual country trade talks." According to UBS, the current 25% car tariff and 25% import duty on parts, in effect from next month, along with industry-specific tariffs, are expected to add an average of $5000 to car prices and suppress domestic demand by 9%.
Both UBS and Mizuho softened their price targets for General Motors (GM) and Rivian Automotive’s (RIVN) alongside other auto suppliers. Thursday saw the prices of General Motors drop by 4% and Rivian shares by 2.6%.