Tesla (NASDAQ:TSLA) is gearing up to take the earnings spotlight this week, joining a lineup of market heavyweights set to reveal their latest results. The EV giant will unveil its Q4 performance and 2025 outlook tomorrow (Jan. 29) after the market closes.
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This is an interesting time for Tesla (well, most times are), with the story increasingly pivoting away from its core EV business to the more esoteric environs of its other, still less tangible endeavors, such as the robotaxi (Cybercab) and humanoid robots (Optimus).
Still, EVs remain the bread-and-butter business for now, and once again margins will be under the microscope. Morgan Stanley analyst Adam Jonas notes that buy-side expectations for Q4 gross auto margins (excluding regulatory credits) are around 15%, while sell-side consensus is slightly higher at roughly 15.7%.
Meanwhile, opposition to EV incentives under ‘Trump 2.0’ has impacted FY25 volume expectations. Jonas thinks buy-side expectations are now for FY25 volume growth closer to 10% rather than 20%, given challenges in the EV market, increased competition from China, slowing Cybertruck volumes, and potential elimination or repeal of EV tax incentives. Jonas sees a significant risk of reduced EV incentives, leading the analyst to revise his FY25 BEV penetration forecast down from the previous 9.0% to 8.5%.
On less quantifiable issues, while Jonas notes that bipedal humanoid robots are drawing significant attention, the analyst reminds investors that there are “many form factors to consider.” The broader opportunity includes any machine with inference compute and cameras that can “navigate and manipulate objects in the physical world.” As Tesla expands its inference network (cars, bots, etc.) and its AI/compute infrastructure (including xAI), Jonas expects both the narrative and the investor base for Tesla to “change materially.”
Jonas notes a tech CEO who described Tesla’s vehicles as “probes,” valuable tools for collecting data to train robotic foundation models. The analyst says Tesla is competing in a “hotly contested ‘race for photons’ with its AI brothers and sisters where you will see a proliferation of data ‘capture’ from a wide spectrum of sensor modality.”
On autos, Jonas thinks the Trump Administration’s aggressive use of tariffs seems designed to “accelerate onshoring of AI-enabling technology underpinned by a more de-risked supply chain.” As AI continues to move into the physical world, significant gaps will emerge between the demand for components and the reliable onshore or nearshore supply, which will attract greater attention from both investors and policymakers. Similar to the Monroe Doctrine’s stance against European colonization in the Western Hemisphere, Jonas expects policies to push for new domestic sources of critical EV and AV technologies.
“In our view,” Jonas summed up, “Tesla’s role in helping to ‘fill the void’ of next gen manufacturing and supply chain will be an increasingly consequential driver of growth and shareholder value.”
With that bullish take, Jonas assigns an Overweight (i.e., Buy) rating to Tesla shares, along with a $430 price target, implying an 8% upside over the next 12 months. (To watch Jonas’ track record, click here)
On balance, the Street is more cautious here. Tesla stock only claims a Hold (i.e., Neutral) consensus rating, based on a mix of 13 Buys, 9 Holds and 8 Sells. Going by the $338.91 average price target, the shares will be changing hands for a ~15% discount a year from now. (See Tesla 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.
