- HSBC cut Tesla’s (TSLA) stock price target to $130 from $165, warning of a 50% drop from the March 26 close of $272.06 due to weak fundamentals and rising competition.
- HSBC predicts a tough Q1 2025 with deliveries possibly as low as 343,000 units or 385,000 units (4% below consensus), driven by production losses from the new Model Y rollout and eroding brand strength in markets like Europe and China.
- Despite Tesla’s autonomous driving promises, HSBC sees earnings pressured by slowing growth and pricing strategies, though new models and AI enthusiasm could offer some upside potential.
Tesla’s (TSLA) stock is experiencing a modest uptick, climbing 2.26% to $278.20 in early trading Thursday, but the mood isn’t entirely celebratory. HSBC, a major player in financial analysis, has thrown a wrench into the optimism by slashing its price target for Tesla to $130 from $165, signaling a potential dip of more than 50% from the last closing price of $272.06. This isn’t just a minor adjustment—it’s a bold statement, backed by the bank’s decision to stick with its “Reduce” rating, reflecting deep concerns about where the electric vehicle giant is headed.
The pressure on Tesla has been brewing for a while, and HSBC’s report zeroes in on some critical weak spots. Take Europe, for instance, where fleet buyers make up roughly 60% of the new car market. Back in December 2022, Tesla slashed list prices, a move that didn’t sit well with these big customers who prefer stability over discounts. That choice, alongside Tesla’s habit of skipping regular model updates, has started to chip away at its edge. The refreshed Model 3, rolled out in Q4 2023, gave sales a quick jolt, but it wasn’t enough to turn the tide. Now, with the new Model Y in the works, HSBC isn’t convinced it’ll be a game-changer either, especially as competition heats up and Tesla’s brand takes a few hits.
Looking at the numbers, Q1 2025 could be a rough patch. HSBC predicts Tesla might deliver around 385,000 vehicles, a 4% dip below what Visible Alpha’s consensus expects. If the new Model Y doesn’t spark demand, that figure could sink even lower to 343,000 units. The reason? Switching production lines to the updated model meant “several weeks of lost production,” leaving factories idle and costs piling up. The bank suspects Tesla will downplay this at the Q1 earnings call, framing it as a short-term hiccup while keeping mum on deeper issues like brand perception. But the numbers don’t lie—margins are feeling the squeeze, and that’s tough to gloss over.
Then there’s the big dream: autonomous driving. Tesla has been dangling this carrot for years, pitching it as the key to unlocking massive value. HSBC isn’t buying it—not yet, at least. The analysts argue that fully self-driving cars are still “years away,” a timeline that clashes with the market’s rosy expectations. In China, where Tesla faces fierce rivals, its limited driver-assistance features aren’t helping, and aging models aren’t winning any favors either. HSBC sees earnings staying shaky, dragged down by slowing growth and those aggressive price cuts that once seemed like a clever play.
Still, it’s not all doom and gloom. Tesla’s got some cards up its sleeve—new battery-electric vehicle models could shake things up, and there’s always the chance that buzz around its AI projects might reignite investor excitement. For now, though, HSBC’s stance is clear: Tesla’s fundamentals are wobbly, and the road ahead looks bumpier than the stock’s Thursday bounce suggests. With shares at $278.20, the market seems to be shrugging off the warning, but if HSBC’s right, and that’s a big ‘if’, that $130 target could loom large sooner than Tesla fans might hope.
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