According to Elon Musk, Tesla, Inc. (NASDAQ:TSLA) has always been more than just a car company. It is not hard to see the logic, as TSLA’s focus on technology, innovation, and AI have helped create a different dynamic surrounding the company than that of a traditional vehicle manufacturer.
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And yet, at the end of the day, the company’s most tangible products—at least for now—are vehicles. Judging by this metric, Tesla stumbled a bit during 2024, experiencing its first year-over-year decline in vehicle sales, while slowing Q4 deliveries failed to match expectations.
What should investors be expecting in the run-up to the release of the EV maker’s Q4 2024 print on January 29th? Investor Bohdan Kucheriavyi believes that a harsh wake-up call could be on the horizon.
“Now that its sales are declining in a favorable environment, while various challenges are likely to increase in 2025 under the Trump administration, the major problems for Tesla might just be getting started,” explains the 5-star investor.
While honing in on the disappointing sales and delivery numbers, Kucheriavyi anticipates that more challenges are likely to pop up under Trump 2.0 due to regulatory changes that are on the docket.
For instance, Tesla was one of the largest beneficiaries of the $7,500 EV tax credit, the investor notes. The probable elimination of this tax credit could very well have a harmful impact on sales, and profits.
“If the regulatory credits indeed disappear, Tesla’s profit margins could tank to significantly lower levels,” details Kucheriavyi.
Further squeezing margins, the investor mentions that any trade kerfuffles with Canada and Mexico would also be acutely felt. This is particularly the case when it comes to the company’s supply chains, as up to 25% of the parts used to make Tesla vehicles come from Mexico.
On the other hand, the investor acknowledges that the likelihood of more lenient regulations under Trump could support the roll-out of TSLA’s self-driving vehicles. The expected release of the compact Tesla Model Q might also provide a bump for the stock in the coming year, adds Kucheriavyi.
Still, the investor is not sold by the bullish arguments.
“While Tesla still has some growth opportunities, it’s going to be hard for the company to offset the decline in vehicle sales,” concludes the investor, who is rating TSLA a Sell. (To watch Kucheriavyi’s track record, click here)
Wall Street’s views, on the other hand, are a bit mixed. With 12 Buy, 10 Hold, and 8 Sell ratings, TSLA holds a consensus Hold (i.e. Neutral) rating. Its 12-month average price target of $345.11 hints at losses of ~15% in the coming year. (See TSLA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
