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Tesla (TSLA) shares are down in intraday trading on March 4 on concerns the new tariff environment will prove to be a meaningful headwind for the electric vehicle manufacturer in 2025.
Bank of America analyst John Murphy expects higher levies on Canada and Mexico that took effect today to weigh on the company’s production in North America.
Murphy also warned the new tariffs “could create a supply shock similar to COVID” in a research note on Tuesday. Including today’s decline, Tesla stock is down nearly 40% versus its year-to-date high.
Tesla Stock Faces Several Headwinds Ahead
Trump tariffs mean “renewed uncertainty” for Tesla shares this year, according to the Bank of America analyst.
Meanwhile, the automaker is grappling with a production slowdown in Europe while consumers are turning anxious waiting for an update on the company’s plans to launch a low-cost model.
Put together, these factors could lead to a “potential souring” of sentiment on Tesla stock, the Bank of America analyst added as he lowered his price target on the EV company by a staggering $110.
However, the firm’s revised estimate of $380 continues to indicate potential upside of more than 40% in TSLA from current levels.
TSLA Has Been Struggling With Sales Momentum
Murphy lowered his price target on Tesla stock this morning also because it’s seeing intense competition from the likes of BYD (BYDDY).
Lower priced vehicles from rivals are already cutting into the U.S. firm’s market share as evidenced in a sharp decline in its sales in both China and Europe in recent months.
In January, Tesla reported the first-ever decline in its annual deliveries. Its share price has been in a downtrend this year also because its revenue came in over $1 billion below Street estimates in Q4.
Analysts Continue to See Material Upside in Tesla Shares
Despite aforementioned headwinds, analysts continue to see significant upside in Tesla stock.
The consensus rating on the multinational automotive and clean energy giant currently sits at “Hold” but the mean target of about $352 indicates potential upside of nearly 35% from here.
