The past week has been eventful for the automotive sector and the analysts who monitor it. Tesla has drawn attention with its significant public presence at the White House, causing concern among analysts about the company’s future outlook. Meanwhile, Citibank is turning attention to a prominent Chinese competitor of Tesla, betting on growth outside of electric vehicles. Tesla is also reportedly preparing to introduce a new, affordable model in China.
On March 11, in an event held on the South Lawn of the White House, U.S. President Donald Trump and Tesla CEO Elon Musk showcased some of the company’s electric vehicles. This display followed a Truth Social post from President Trump, reflecting his support for Tesla amidst ongoing boycotts and protests against the company. During the event, Trump expressed admiration for Tesla’s technological advancements while sitting in a Tesla Model S.
Despite the apparent enthusiasm for Tesla, analysts from Wells Fargo and JP Morgan have expressed negative outlooks for the company. JP Morgan’s Ryan Brinkman, in a note dated March 12, pointed to Musk’s political engagements as having a detrimental effect on Tesla’s value, even lowering his price target for the stock and reducing global delivery estimates for the first quarter. Similarly, Wells Fargo analysts Colin Lang and Kosta Tasoulis highlighted concerns about political backlash and adjusted their price target for Tesla, projecting a decline in vehicle deliveries for the year.
In contrast, Morgan Stanley analysts noted recent sales data and brand sentiment as factors influencing a decline in Tesla shares, although they suggested a potential buying opportunity.
Elsewhere, Citibank has expressed optimism about XPeng, a Chinese competitor to Tesla, upgrading its status and increasing its price target due to promising projected sales volumes. XPeng is expected to benefit from its commitments to AI and robotics, which distinguishes it from other Chinese electric vehicle manufacturers.
Meanwhile, Tesla may be on the verge of releasing a more affordable electric vehicle, the Model Q, sometime in the first half of 2025. Reports suggest that this model will be priced under $30,000, factoring in subsidies, and will be initially produced in Shanghai. The new model aims to reduce production costs significantly compared to the existing Model Y. Tesla confirmed that it remains on schedule to introduce new vehicles, including more affordable options, by early 2025.
The emphasis on sales in China aligns with broader trends, as Tesla’s market share in the region has faced increased competition from domestic manufacturers, resulting in a slight decrease. This strategy reflects a response to global sales challenges, including in the U.S., where market dynamics continue to evolve rapidly.
