Analysts Reduce Target Prices for Tesla Stock Citing Tariffs in the Auto Industry

1fe1aade908968fa9eac11491b18ad75 Bitcoin Recovery Software 1 5:23 pm Crypto Insights

Cars parked at a Tesla lot

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Takeaways

  • UBS and Mizuho analysts reduced their targets for Tesla, citing the possibility of tariffs affecting the auto industry as a whole.
  • UBS estimates that demand for electric cars is already weak, and sales could drop an additional 11% between now and 2025.
  • Analysts have also lowered their price expectations for General Motors Rivian and a number auto suppliers.

Analysts reduced targets for Tesla on Friday amid concerns that tariffs would weaken the auto industry.

UBS has cut its target price on Tesla (TSLA) from $190 to $190. It estimates that Tesla’s vehicle deliveries in 2025 will decline by 11%. Mizuho analysts stated that tariffs would increase Tesla prices, and erode a demand already weakening. They lowered their target price to $375. Visible Alpha estimates that the consensus analyst estimate for Tesla shares is around $327, or about 30% above Thursday’s close price.

“While lower estimates are now more widely expected, we believe that the entire trajectory of earnings for [Tesla] …” UBS said in a note on Thursday that the stock price is still too high. It added that the shares would likely be “volatile but downward-sloping.”

Tesla shares, and the wider market, have fluctuated in recent weeks amid changes in U.S. Trade Policy. Elon Musk, the CEO of Tesla, has been instrumental in reducing government spending. This has also affected the stock prices. The stock price of Tesla was down by more than 7% Thursday, but it was still up more 40% compared to a year before.

The Trump administration has reduced tariffs on some U.S. trading partner countries this week, but goods from China are still subject to tariffs that are more than 100%. This includes car batteries and their parts. Mizuho estimates that import taxes of 25% on cars will continue to be in place, which could increase prices, discourage consumers, and reduce Tesla’s revenue in the U.S. by 3.5%.

UBS stated: “While a decrease in reciprocal tariffs can help reduce recession/demand-destructive risk, we highlight that the auto tariffs sector specific and are not subject to individual country negotiations,” UBS said. “Our view is that they will likely remain for a foreseeable future.”

Trade Policies May Usher in 'New Era' for Auto Industry

UBS analysts estimated that sector-specific taxes will add an average of $5,000 in car costs, and reduce the domestic demand by about 9%. They accounted for the current 25% tax on cars, and the 25% tax on imports on parts which is set to come into effect at the beginning of next month. UBS said that the trade policies could bring about “a new era for the U.S. automotive industry”.

UBS stated that “Production disruptions will be likely…and supply chain optimizations that were designed over decades may have to be reimagined.”

Mizuho estimated that tariffs may also reduce General Motors’ (GM’s) domestic annual revenue of 4% and Rivian Automotive’s (RIVN’s) by 3.5%. Both Mizuho & UBS lowered the price targets they had set for GM, Rivian Automotive and several auto suppliers.

Rivian shares dropped 2.6%, while General Motors shares fell 4.0%.

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