Tesla (TSLA) investors were a happy bunch once Elon Musk waved farewell to his government duties, with his time as part of the Trump administration nothing short of a disaster for the EV giant. Musk’s controversial policies as the head of DOGE and embrace of far-right tropes were the cue not only for massive worldwide protests but also sent Tesla vehicle sales cratering in Q1.
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However, any hopes that Musk’s return to the Tesla office might mark a turning point for the company have so far proven unfounded. As Tesla prepares to release its Q2 delivery numbers, the latest data points to another disappointing quarter, suggesting that the damage done during Musk’s political detour continues to weigh on buyer sentiment.
In fact, J.P. Morgan analyst Ryan Brinkman’s channel checks indicate that the weak demand seen in Q1 has persisted into the second quarter. Drawing on sales trends through May and early June – using public reports for Europe, third-party forecasts for the U.S., and insurance registrations in China – Brinkman now anticipates that the year-over-year drop in deliveries will only worsen, accelerating from a 13% decline in Q1 to a 19% decline in Q2. The analyst projects that deliveries will fall from 444,000 a year ago to just 360,000 this quarter – 8% below the consensus estimate of 392,000.
This downward trend casts a shadow over the remainder of the year. Brinkman sees “material risk” to the full-year delivery outlook, pointing out that Wall Street is counting on a sharp turnaround in the second half, despite looming cuts to EV subsidies and a challenging macro environment. While analysts surveyed by Bloomberg expect Tesla to deliver 922,000 vehicles in 2Q25 (432,000 in Q3 and 490,000 in Q4) – a substantial 32.3% increase from the 697,000 deliveries Brinkman expects in the first half – historically, Tesla has averaged a much more modest 9% second-half increase over the past two years (15% in 2024 and just 3% in 2023) after the chip shortage.
“While sales could potentially benefit from the introduction of a lower cost model before year-end, it likely would remain in launch mode (limiting the volume benefit) and affordability more generally seems just as likely to be challenged by the potential sooner than expected lapsing of the $7,500 federal Consumer Tax Credit (CTC) as called for in a recent Senate version of proposed legislation,” Brinkman went on to say.
Against this backdrop, Brinkman has trimmed his EPS estimate for Q2 from $0.48 to $0.42, now below the consensus of $0.45. For the full year, his EPS forecast falls from $2.07 to $1.75, also trailing the consensus estimate of $1.87.
All told, Brinkman is sticking with his Underweight (i.e., Sell) rating on TSLA shares, with a $115 price target that implies a steep 62% downside over the next 12 months. (To watch Brinkman’s track record, click here)
The Street’s average price target is a more forgiving $291.31, a figure that still implies shares are overvalued by 3%. On the rating front, based on a mix of 14 Buys, 12 Holds and 9 Sells, the analyst consensus rates TSLA a Hold (i.e., Neutral). (See TSLA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.