Tesla's stock outlook after recent decline

Posted on Views: Word count in article: 486 Reading time ≈ 2 mins.

Reasons for the Recent Stock Price Drop

  1. Declining Sales in Key Markets

    • Tesla has faced significant sales declines in major markets:
      • China: February 2025 deliveries dropped 49.2% YoY (30,688 units), attributed to product transitions (Model Y refresh) and competition from brands like BYD and Xiaomi .
      • Europe: Sales in Norway, Sweden, and Denmark fell ~48% YoY, while Germany hit a 2021 low due to regulatory challenges and competition .
      • U.S.: California sales declined 8% QoQ in Q4 2024, part of a broader trend of slowing domestic demand .

  2. Internal Challenges and Leadership Distractions

    • CEO Elon Musk’s political involvement (e.g., leading a federal “government efficiency” initiative) has drawn criticism, sparking protests at Tesla stores and concerns about his focus on the company .
    • High-profile stock sales by executives, including Chair Robyn Denholm’s $33.7 million sell-off in March 2025, eroded investor confidence .

  3. Macroeconomic and Competitive Pressures

    • Rising tariffs (e.g., on Canadian/Mexican components) and price wars in the EV sector squeezed margins .
    • Global EV market growth (~20% in 2024) contrasted with Tesla’s 1% sales decline, highlighting market share losses to competitors .

  4. Regulatory and Technological Hurdles

    • Delays in Full Self-Driving (FSD) approvals in Europe (projected for 2026) and China (due to data transfer restrictions) slowed monetization of autonomy efforts .

Outlook for the Next Three Months (March–June 2025)

  1. Short-Term Volatility with Potential Catalysts

    • Near-Term Risks: Continued pressure from weak Q1 sales data and Musk’s political controversies may keep sentiment bearish . Analysts note technical indicators suggest the stock is oversold but lacks immediate catalysts .
    • June 2025 Robotaxi Launch: Tesla plans to debut unsupervised FSD-powered robotaxis in Austin, Texas, which could reignite growth narratives. Success here might drive a rebound, with Wedbush targeting $515/share .

  2. Model Q and Market Expansion

    • The $22,000 Model Q (planned for 2025) aims to capture the budget EV segment. Production in China could stabilize sales if demand meets expectations .

  3. FSD and Regulatory Progress

    • Approval for FSD in China (pending regulatory clearance) and Europe’s “supervised mode” rollout in 2026 may improve long-term prospects, but near-term impact is limited .

  4. Technical Forecasts and Analyst Sentiment

    • LongForecast’s model predicts volatility:
      • March 2025: -30.4% (close at $204) .
      • April–June 2025: Gradual stabilization with potential +15% rebound in July .
    • Mixed analyst targets: Morgan Stanley ($400) and Wedbush ($515) remain bullish on AI/autonomy, while others caution about execution risks .

Investment Recommendation

  • Short-Term (Next 3 Months): Expect continued volatility with downside risks (~$250–$270 range) until Robotaxi/Model Q updates materialize. Monitor Q1 earnings (April 2025) for signs of margin recovery .
  • Long-Term: If FSD/robotaxis gain traction and Model Q scales, Tesla could retest $350–$400 by late 2025. Regulatory approvals in China/Europe remain critical .

Key Risks: Musk’s political activities, slower FSD adoption, and competition in China/Europe. Investors should balance optimism with caution until execution improves.

For further details, refer to LongForecast and Tesla’s Q4 2024 update .