During Tesla’s (TSLA) first-quarter earnings call, CEO Elon Musk made it clear that he does not support President Trump’s stance on tariffs. Musk said he has always believed that lower tariffs are better for economic growth, though he recognized that the final decision is up to the president. When asked later about earlier comments where he mentioned raising tariffs gradually, Musk clarified that he supports free trade and stable tariff rules but said tariffs might be needed if another country is acting unfairly or giving too much support to its own industries.
Even though Musk supports Trump overall, he warned that new tariffs could seriously hurt Tesla. While Tesla says about 85% of its supply chain meets USMCA rules and is mostly local, it still depends on some foreign parts, especially in its energy division. Furthermore, in its Q1 report, Tesla said that trade uncertainty has been a key reason for lower sales. The company also noted that political changes and global trade issues could reduce short-term demand and increase costs. Because of this, Tesla removed its long-term growth forecast and said it will update its 2025 guidance in the next quarter.
Analysts agree that tariffs could affect several parts of Tesla’s business. Bank of America’s John Murphy pointed out that Tesla’s energy division could be hit the hardest because it uses Chinese-made LFP batteries. He also mentioned other risks, like China’s restrictions on rare earth minerals and Tesla’s use of Chinese equipment. Still, some analysts believe that Tesla is in a better position than others. William Blair’s Jed Dorsheimer said Tesla is “the best house on a bad block” because most of its cars are made in the U.S. and its factories are highly self-reliant. Still, he warned that Tesla is affected by the larger economy.
Is Tesla a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 16 Buys, 11 Holds, and 12 Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average TSLA price target of $286.66 per share implies 11.6% upside potential.
