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Tesla's (TSLA) meteoric rise has taken it from a niche electric vehicle startup to a global icon of clean energy and autonomous innovation. Under Elon Musk’s vision, Tesla’s growth has been nothing short of extraordinary. With Donald Trump’s re-election in 2024, Tesla could gain from potential policy shifts favoring domestic manufacturing and energy independence, strengthening its U.S. position.
However, in Europe, Tesla's trajectory has taken a contrasting turn. According to November sales data from the European Automobile Manufacturers’ Association (ACEA), the EV market has shown year-to-date growth. However, Tesla’s sales have declined nearly 14%, weighing heavily on the segment’s overall performance.
Electrek highlights that Tesla’s declining numbers, despite price cuts and local Model Y production, point to growing competition in key markets like Germany and France. Meanwhile, the industry expert cautioned that Tesla’s flat U.S. sales, coupled with pricing pressures and policy uncertainty, could signal challenges ahead.
Let’s dive deeper into what’s driving these trends and their implications for Tesla's future.
About Tesla Stock
Texas-headquartered Tesla, Inc. (TSLA), with a market cap of $1.4 trillion, designs and manufactures battery electric vehicles, solar energy generation solutions, and energy storage devices. Plus, Tesla increasingly emphasizes offerings centered around artificial intelligence (AI), robotics, and automation.
Since its 2010 IPO, Tesla has delivered a jaw-dropping 2,739.8% return, transforming early investors into major winners. Although 2024 has been a tough year, TSLA surged nearly 15% on Nov. 6 after the election results and has rallied 73% since Nov. 5. Investor optimism skyrocketed, fueled by Trump’s praise for Musk as a "genius," pushing Musk’s net worth above $400 billion. In just six months, Tesla stock has shot up 135%, showcasing its resilience and potential.
The stock currently trades at 200 times forward adjusted earnings and 13.55 times sales – a premium to many of its Magnificent 7 peers, as well as TSLA’s own 5-year average multiples.
Tesla Soars After Q3 Earnings
Tesla's Q3 financials painted a vivid picture of resurgence. Amid the Musk-Trump buzz, Tesla’s Q3 earnings results in October sparked its stock’s best single-day gain in a decade, soaring 21.9%. Revenue climbed 8% year-over-year to $25.2 billion. Breaking a streak of earnings misses, adjusted EPS of $0.72 outpaced Wall Street’s forecasts.
Production revved back up, with 469,796 vehicles built, up 9% annually, and 462,890 delivered, up 6%. Tesla's Supercharger network surged, adding 1,111 stations to hit 6,706. Operating margins rose to 10.8%, underscoring cost-efficiency gains.
Cost-trimming efforts paid off, with free cash flow tripling to $2.7 billion and operating cash flow doubling to $6.26 billion. Tesla’s cash reserves swelled to $33.6 billion, dwarfing its $2.3 billion short-term debt. With momentum on its side, Tesla is accelerating toward a future powered by innovation and financial discipline.
Analysts tracking Tesla predict fiscal 2024 EPS to be around $1.99, down 23.5% year over year before surging 43.2% annually to $2.85.
Tesla's European Struggles Spark Concern
Tesla’s dominance in Europe faces a stark challenge as its 2024 performance lags. In November alone, Tesla delivered 26,200 vehicles across Europe, 10,000 lower than in the same month the previous year. Tesla’s sales from January to November have plunged 13.7%, from 327,600 in 2023 to 282,700 this year, despite aggressive price cuts and ramped-up Berlin production.
Electrek highlighted how Tesla’s dip has dragged the entire European EV market downward. Excluding Tesla, European BEV sales are actually up 1.3%. The data shows that Tesla faces increasing competition, particularly in key markets like France and Germany, where sales are struggling. Electrek suggests that the issue isn’t the overall EV market but Tesla’s own performance, raising concerns about its future in Europe and the U.S. with changing incentives.
The situation might have been graver for Tesla without strategic price cuts and ramped-up Model Y production at its Berlin factory. Yet, Tesla’s struggles in Europe persist, highlighting deeper challenges.
The Dacia Sandero has dethroned the Model Y as 2024’s best-selling car, signaling a seismic shift in consumer preference. Tesla’s challenges extend beyond numbers. Shifting priorities, such as Musk’s focus on AI and autonomous driving, are raising eyebrows.
Yet, hope remains. With two affordable models slated for 2025 and potential Model Y updates, Tesla could turn the tide. Its ability to adapt to fierce competition and evolving market dynamics will determine whether it regains its foothold or continues to lose ground in Europe’s rapidly evolving EV landscape.
What Do Analysts Expect for Tesla Stock?
Last week, Mizuho analysts upgraded TSLA to “Outperform” from “Neutral,” raising the price target to $515 from $230 – also the Street-high - implying upside of 20%. Analyst Vijay Rakesh cited regulatory tailwinds for autonomous driving and the potential boost from new Trump administration policies.
With Tesla’s competitive edge in EVs and advancements in Full Self-Driving, Rakesh forecasts substantial growth, including the rise of humanoid robots. Despite some near-term hurdles, like European Union tariffs and potential U.S. EV tax credit repeals, the firm believes Tesla’s positioning will outpace its rivals, making it a prime pick for investors.
Additionally, Wedbush analysts, led by Daniel Ives, also upped Tesla's price target to $515, citing a “game-changing” potential under a Trump administration for Tesla’s autonomous driving and AI ambitions. They forecast a bull case where TSLA could hit $650 by fiscal 2025. Ives believes Tesla’s AI and autonomous ventures alone could be worth over $1 trillion. With regulatory hurdles easing, Wedbush sees Tesla reaching a $2 trillion market cap by 2025, especially with strong demand from China.
TSLA stock has a consensus “Hold” rating overall. Among the 38 analysts in coverage, 12 suggest a “Strong Buy,” two advise a “Moderate Buy,” 15 recommend a “Hold,” and the remaining nine analysts advocate for a “Strong Sell.”
TSLA currently trades at a premium to the average analyst target price of $286.76.
