Tesla (NASDAQ: TSLA) could face an additional 45% downside, despite already plunging 40% year-to-date, according to a Wells Fargo report on Friday. The bank reiterated its Underweight rating on the stock and cut its price target to $130 from $135, citing weak fundamentals, declining sales, and shrinking margins.
Tesla’s core business remains under pressure, with analysts pointing to worsening demand across key markets. “Shocking YTD EU sales have finally shifted focus to fundamentals,” the report stated, underscoring concerns that have been mounting since the firm’s March 2024 downgrade.
Tesla’s Sales Plummet Across Key Markets
Despite aggressive price cuts, Tesla’s global sales continue to slide:
- Europe: Down 45% in January and 41% in February across the top nine markets.
- China: Sales have dropped 14% year-to-date.
- United States: Down 11% in January, according to S&P estimates.
The demand downturn comes as Tesla faces rising competition from Chinese EV makers, softening consumer sentiment, and recent protests and vandalism in certain regions that may further impact future sales.
Wells Fargo also slashed its Q1 2025 delivery estimate to 360,000 units, marking a 27% quarter-over-quarter drop and a 7% year-over-year decline.
New Models and Price Cuts May Not Be Enough
Tesla is betting on a refreshed Model Y and the new Model “2.5” to revive demand in Q2. However, analysts remain skeptical about their impact:
- Price cuts are losing effectiveness, as competition in China intensifies.
- New models could cannibalize existing Model 3/Y sales rather than expand Tesla’s market share.
- CyberCab rollout in Austin faces hurdles, with limited testing and concerns over Tesla’s vision-only autonomous approach.
With earnings expectations falling and market sentiment weakening, Wells Fargo analysts warn that Tesla’s stock could see further downside pressure in the coming months.