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Tesla Stock Price Target Slashed Amid Trade War and Musk-Trump Ties
A long-time advocate for Tesla has significantly reduced his projected stock price for the company by 43%, citing President Trump’s trade dispute and Elon Musk’s controversial relationship with the president as creating a “perfect storm” of challenges for the electric vehicle manufacturer.
Analyst Revises Tesla Outlook
Wedbush analyst Dan Ives stated that he now anticipates Tesla shares to reach $315 within the next year, a considerable decrease from his previous forecast of $550. Tesla’s stock price experienced an initial drop of approximately 6% at the start of trading on Monday, settling at around $239.43 per share, coinciding with broader market instability linked to Trump’s tariffs.
“We have been among the most ardent backers of Musk and Tesla for the past decade,” Ives noted in a client brief on Sunday. “However, the current situation is untenable, and Tesla’s brand image is being negatively impacted daily as it becomes a political symbol.”
Vandalism and Rising Manufacturing Costs
Tesla dealerships have recently been targeted by a series of vandalism incidents as Musk has taken a prominent role in the Trump administration’s Department of Government Efficiency (DOGE) initiative.
Concurrently, Tesla, along with other automobile producers, is poised to encounter increased production expenses due to Trump’s implementation of 25% tariffs on all imported automobiles and auto components, which are disrupting global supply chains.
While Tesla is considered to have less exposure compared to other American automotive brands due to its domestic manufacturing of vehicles sold in the United States, the company is not expected to be completely unaffected.
Other automakers also witnessed declines in early trading. Among Detroit’s “Big 3”, both Ford and GM experienced drops of roughly 3%, while Stellantis saw a more significant decrease of about 7%.
Impact of Tariffs on Car Sales
Vehicle sales across the US and Canada could potentially decrease by 1.8 million units this year alone due to the tariffs, according to an analysis conducted by Telemetry, a firm based in Detroit. Should these tariffs remain in effect for the next decade, sales volumes could be approximately 7 million units lower than projected under conditions without a trade war and with robust economic expansion.
Telemetry’s vice president of insights, Sam Abuelsamid, informed Reuters that job losses and increased vehicle prices are also anticipated consequences of the tariffs.
China Market Concerns
“The primary concern, in our view, is Tesla’s success in the Chinese market, as this vital region is crucial for Tesla’s future growth,” Ives added. “The negative repercussions from Trump’s tariff policies in China, coupled with Musk’s association with the administration, should not be underestimated and will likely encourage Chinese consumers to favor domestic brands such as BYD, Nio, Xpeng, and others.”
Decline in Deliveries and Trade-ins
Tesla’s deliveries, widely regarded as a reliable indicator of sales, decreased by 13% in the first quarter. Separately, the proportion of Tesla vehicles being traded in for other new or used vehicles at dealerships reached a “record high” in March, according to an Edmunds report.
Reports indicate that Trump’s trade war is expected to significantly benefit the Chinese electric vehicle manufacturer BYD. BYD has already surpassed Tesla in annual revenue, exceeding $100 billion, and has expanded its presence in key international markets including Europe and South America.
Musk Criticizes Trade Advisor
In a reflection of the challenges confronting Tesla, Musk appeared to diverge from the Trump administration’s stance over the weekend, publicly criticizing trade advisor Peter Navarro.
“Ultimately, I hope it is universally accepted that both Europe and the United States should ideally move towards a zero-tariff arrangement, effectively establishing a free trade area between Europe and North America,” Musk stated during an event with Matteo Salvini, leader of Italy’s League Party.
Navarro responded to Musk’s remarks during a Fox News appearance on Sunday, asserting that the Tesla CEO was “simply acting in his own self-interest.”