While electric vehicle giant Tesla (TSLA) has had things a bit rough lately, particularly given the market demand for electric vehicles of late, there are some positive signs ahead. Some reports even suggest that a trade war with China could be good news for Tesla. Investors were less sure, though, as shares dipped nearly 2.5% in Wednesday afternoon’s trading.
Invest with Confidence:
- Follow TipRanks' Top Wall Street Analysts to uncover their success rate and average return.
- Join thousands of data-driven investors – Build your Smart Portfolio for personalized insights.
For Tesla, China is one of its primary competitors. With multiple firms operating in that space under the heading of “new energy vehicles,” Tesla has a lot of competition to face down in order to make any headway in that market. Moreover, the Chinese electric vehicle makers are looking to branch out, offering their products up to other markets, including those that Tesla is in.
But with a trade war between the United States and China, Tesla gets a little protection from those potential imports thanks to hefty tariffs. And, if the U.S establishes tariffs on Chinese products, other countries wishing to remain in the U.S.’ good graces may also follow suit.
Price Hikes Showing Up
We also know that, not so long ago, Tesla hiked prices on some of its models in Canada. With the possibility of a trade war coming there as well, Tesla may be working to reduce some of the impact of that trade war in advance. While the trade war with either nation has not been formally established, Trump’s plan to raise cash via tariffs—and maybe get some of the weight off American taxpayers—could have far-reaching ramifications in its own right.
But with Trump coming around to the electric car concept—President Trump recently said “I’m for electric cars. I have to be, because Elon endorsed me very strongly.”—there may be some room for at least some of the old federal incentives to make a comeback. That could light a fire under the market and give Tesla back at least some of its old sales.
Is Tesla a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 12 Buys, 10 Holds, and eight Sells assigned in the past three months, as indicated by the graphic below. After a 101.22% rally in its share price over the past year, the average TSLA price target of $339.15 per share implies 13.02% downside risk.
