Tesla’s (TSLA) stock price took a hit on Monday afternoon despite a partial recovery in the broader market. The electric vehicle maker is being closely watched as the U.S. and China edge closer to a trade war. This is because Tesla’s heavy reliance on Chinese components for its vehicle production makes it vulnerable to the impending tariffs.
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Indeed, the company’s CFO, Vaibhav Taneja, recently acknowledged that despite efforts to localize its supply chain, Tesla remains heavily dependent on international parts. As a result, higher tariffs would increase Tesla’s production costs and force the company to either absorb the expenses or pass them on to consumers. The former solution would hurt margins, while the latter could impact demand for its vehicles.
It also does not help that new data for January suggests Tesla may have lost ground in key European markets such as the UK, France, and Netherlands. It is worth mentioning that no tariffs have been placed on Europe yet, but it could end up being just a matter of time before that happens. That would inevitably lead to retaliatory tariffs from Europe that would further hurt Tesla’s already slumping sales.
Is Tesla a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 12 Buys, 12 Holds, and nine Sells assigned in the past three months, as indicated by the graphic below. After a 112% rally in its share price over the past year, the average TSLA price target of $338.85 per share implies 12% downside risk.
