Wells Fargo analysts have sustained their Underweight rating and a target price of $120 per share for Tesla (NASDAQ:TSLA), following a comprehensive review of its Q2 performance. The analysts highlighted concerns, stating, “Q2 deliveries again point to a challenging quarter.”
Despite Tesla’s global presence, May’s global deliveries were reported to be 23% lower than the same period last year, with a 21% decrease quarter-to-date. All key markets—North America, Europe, and China—are witnessing substantial declines, with Europe being the hardest hit.
Wells Fargo’s commentary remarked, “The fundamentals of Tesla’s core automotive business are showing signs of weakening.” Although the “order pricing on the website appears to have stabilized over the past year,” ongoing “aggressive financing promotions” are effectively serving as price discounts, potentially impacting Q2 margins adversely.
While investor focus is partially directed towards the upcoming Austin Robotaxi launch on June 12, the bank expressed skepticism, noting, “This limited rollout may not compensate for the underlying weak fundamentals.”
In North America, Tesla’s deliveries are 13% lower than last year since the quarter commenced. Contributing factors include “a steady decline in EV demand,” “increased competition from other EV manufacturers,” and “a tarnished brand perception possibly linked to Elon Musk’s political engagements.”
Europe remains a “significant concern,” with Q2 deliveries down by 42% compared to the previous year, and a year-to-date decline of 37%. May alone saw a 29% drop across the continent, with 10 out of 11 countries experiencing substantial contractions. Nations such as France, Portugal, and Sweden showed declines exceeding 50%.
In China, Tesla’s second-largest market, there has been a 22% decrease in deliveries since the beginning of the quarter. Wells Fargo notes that “competition in China is increasingly impacting Tesla’s market position,” with local manufacturers like BYD and Chery “continuing to undercut Tesla’s pricing strategy.”
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