Tesla: Stock Plunges on Fears Deliveries Will See Large Drop

Tesla shares now trade below our fair value estimate.

Seth Goldstein, CFA 11 March, 2025 | 9:50AM
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JANUARY 25th 2024: Tesla, Inc. stock shares plummet after fourth quarter earnings report miss and warnings of lower production growth rate. - File Photo by: zz/STRF/STAR MAX/IPx 2021 5/15/21 The Tesla Automobile dealership on May 15, 2021 in Downtown Manhattan, New York City. (NYC)

Key Morningstar Metrics for Tesla


Tesla TSLA shares Tesla shares closed 15% lower on Monday as the market reacted to an analyst downgrade and fears that increased competition and CEO Elon Musk’s political activities will lead to lower deliveries and profits in 2025.

Why it matters: Tesla’s primary business is selling autos. While management’s long-term vision is to transition to robotics, autonomous driving software, and ride-hailing, we expect autos will remain the primary business through at least the rest of the decade.

• In Tesla’s three key auto markets—the United States, China, and Europe—it faces strong competition in the long-range entry-level luxury electric vehicle market. In the US and Europe, Tesla has historically offered the best combination of range and price, but other brands are now comparable.

• Musk serves as an advisor to US President Donald Trump and actively campaigned for the far-right Alternative for Germany party in recent German elections. These moves risk turning consumers away from Tesla’s brand.

The bottom line: We maintain our $250 fair value estimate for narrow-moat Tesla. We view Tesla shares as fairly valued, trading just a little below that estimate. We recommend investors wait for a larger margin of safety before considering an entry point.

• We see elevated risk for Tesla. However, we think it is still too early to conclude Musk’s political actions will hurt Tesla sales in 2025. In the US, Wards Intelligence’s auto data shows year-over-year sales growth in February. In China, February sales were hit by the timing of the Lunar New Year.

• We also view the first quarter of 2025 as somewhat of a transition for Tesla. The new Model Y will not be released for most of the quarter in Tesla’s key markets. Additionally, Tesla plans to launch its more affordable SUV later in the year, so some consumers could be waiting to buy that vehicle.


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Seth Goldstein, CFA  Seth Goldstein, CFA, is an equity analyst for Morningstar

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