Diverging Forecasts for Tesla's 2025 Deliveries

Tesla Inc. (NASDAQ: TSLA) is facing differing forecasts regarding its delivery growth for 2025. Expectations from Wall Street are at odds with those from independent analysts, creating an air of uncertainty about future vehicle launches and potential policy changes that could impact sales.

Overview of Predictions: Gary Black, Managing Partner at The Future Fund LLC, pointed out that while Wall Street anticipates Tesla will deliver 2.07 million units in fiscal 2025, which signifies a 16% increase from the previous year, well-known Tesla forecaster Troy Teslike predicts a slight decline of 1%. This disparity comes despite Elon Musk, Tesla's CEO, guiding the market towards a more optimistic outlook of 20-30% growth in his comments during the third-quarter earnings call.

Black specified that Tesla's success in 2025 will be influenced by three significant factors: the effectiveness of the Model Y Juniper refresh, demand for a new vehicle priced between $30,000-$35,000 expected to debut in the first half of 2024, and advancements in their Full Self-Driving technology.

There is a possibility that Wall Street might revise its delivery expectations downwards, potentially affecting the anticipated earnings of $3.24 per share, which represents a 34% growth year-over-year. Black suggested that if this occurs, Tesla's stock could see a drop to the range of $350 to $375 per share, translating to a decline of around 13%, regardless of what management claims regarding autonomy.

Impact of Potential Policy Changes: Adding to the uncertainty is the prospect of the elimination of the $7,500 federal EV tax credit under President Donald Trump’s administration. Black believes this change would hit Tesla hard since approximately 30-35% of its global sales come from the U.S., contrasting with just 4-5% for legacy automakers' EV sales.

In contrast, Dan Ives, an analyst at Wedbush Securities, has a more bullish view, having boosted Tesla’s price target to $550 due to rising confidence in demand and the company's autonomous driving capabilities. Nevertheless, it is noteworthy that earnings estimates for 2025 and 2026 have dropped by 39% and 45%, respectively, over the past year.

The next earnings call will be crucial, with analysts keenly observing fourth-quarter automotive gross margins, predicted to be 16.2% (excluding regulatory credits). The prior quarter produced better-than-expected margins of 17.1%. While Tesla's CFO, Vaibhav Taneja, acknowledged these strong margins, he also raised concerns about sustainability given the current economic landscape.

Stock Performance: Recently, Tesla's stock closed at $406.58 after a decrease of 1.41% for the day, followed by an additional drop of 0.27% in after-hours trading. Over the past year, however, the stock has experienced significant growth, surging by 121.87%, as per data from relevant sources.

Tesla, Forecasts, Stock