Tesla (NASDAQ:TSLA) is struggling so much that even President Donald Trump turned the South Lawn of the White House into an impromptu Tesla showroom. That ad-like event represented another low in a year of lows, and according to one analyst, the road ahead could get even bumpier.
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Guggenheim’s Ronald Jewsikow warns that Tesla’s Q1 deliveries are shaping up to be a big disappointment. He now projects 358,000 units for the quarter, down from his previous forecast of 405,000 and significantly below consensus at 420,000.
Jewsikow anticipates that all major regions will see a decline in Q1 compared to Q4. While he does expect a “material improvement” in both Europe and China in March, based on the EU countries where high-frequency data is available, the month is off to a “slower-than-normal start.”
That said, predicting the range of outcomes for March is quite difficult, as much of the upside or downside depends on the refreshed Model Y and the decision to offer discounts on older generation Model Ys. Nevertheless, early signs are that the refresh so far is no great success.
“We are only dealing with small anecdotes at this point, but wait times in China and the persistence of old Model Y inventory are both negative demand indicators,” Jewsikow said.
On the all-important auto gross margins (ex-credits) front, Jewsikow is also less upbeat than consensus, calling for 12% vs. 13.6%.
Meanwhile, demand is still weakening. While Jewsikow’s analysis doesn’t fully factor in seasonal changes (since Q1 usually sees big seasonal drops), the analyst is seeing much worse demand trends in 1Q25 compared to 1Q24. In fact, this quarter represents the worst “demand elasticity” Jewsikow has measured since the price cuts began in early 2023.
Jewsikow reckons demand elasticity in Q1 is 22X, meaning a 1.2% price increase leads to a 26% drop in demand, which is far worse than 1Q24’s 13X response, even with similar seasonality factors. While the supply of Model Y is partly to blame, the fact that there hasn’t been a clear reduction in Model Y inventory in the US and Europe suggests demand is weak in both regions.
“Even with our model embedding 2% quarterly price cuts for the balance of 2025, we still cannot bridge to volume growth in 2025,” the analyst went on to say.
Given the slow start to the year and the “negative demand readthroughs,” Jewsikow’s has now lowered his 2025 delivery forecast from 1.884 million to 1.732 million, which is lower than the Street’s expectation of 1.962 million.
As a result, his TSLA price target drops from $175 to $170, implying a 29% downside from current levels. Jewsikow advises investors to run for the hills as he rates the stock a Sell. (To watch Jewsikow’s track record, click here)
Elsewhere on the Street, the analyst reviews are split fairly evenly between all the various camps. Tesla stock claims a Hold (i.e., Neutral) consensus rating, based on a mix of 13 Holds and 12 Buys and Sells, each. However, the $331.07 average price target makes room for 37.5% gains over the one-year timeframe. (See TSLA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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