Tesla (NASDAQ:TSLA) shares rose 2.5% today, but the stock remains down ~17% year-to-date, suggesting the post-election rebound is losing momentum.
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The initial surge after Trump’s November victory was largely driven by CEO Elon Musk’s strong backing of the president, fueling expectations that he could wield significant influence in the new administration’s direction.
However, beyond the political angle, Tesla’s bleak Q4 earnings painted a grim picture – a key factor weighing on the stock as investors reassess its outlook.
Adding to the pressure, Musk’s “bull in a China shop” stance on government reform – coupled with his involvement with the regime – seems to be alienating potential Tesla customers. Oppenheimer’s Colin Rusch, an analyst ranked in the top 1% of Street stock experts, has highlighted this as a significant risk factor.
“We view Mr. Musk’s political activity and increased regionalization as a potential overhang on TSLA sell-through,” the 5-star analyst said. “We see the biggest risk in CA and the broader EU, where TSLA has seen ongoing declines since the start of 2023.”
That’s not the only issue Tesla is facing right now. Musk’s political entanglements could have ripple effects beyond sales. Rusch warns of a potential “recruiting risk” as the battle for AI talent intensifies. Many engineers and tech professionals weigh ethical considerations heavily, and Musk’s outspoken stance could make some hesitant to align with Tesla.
Furthermore, already highly combative, competition in China is becoming even more intense. Tesla continues to provide insurance subsidies and 0% financing in the region. Meanwhile, BYD Auto recently lowered the price of its entry-level vehicle to under $10,000, and XPeng has introduced 0% financing along with select free charging offers.
“We would not be surprised to see additional OEMs intensify their incentives based on our observation of trends in solar, LEDs, and batteries, where China OEMs prioritized market share and job creation over profitability,” Rusch commented on the matter.
Intense competition is not reserved solely for China, either. In autonomous vehicles, there are several other names trying to make inroads and that could “limit Tesla’s profitability.” This week brought further signs of industry-wide advancements, with Lyft announcing plans to integrate tech from Mobileye and fleet management solutions from Marubeni by late 2026.
“Even with TSLA meeting its June 2025 timeline for driverless cars in TX, we still see TSLA as one of several autonomous technology providers, suggesting competition on price and performance,” Rusch explained.
All the above are reasons for Rusch to trim some estimates. The analyst has reduced 2025 vehicle deliveries by 20,000 units and now sees 2025 revenues at $99.8 billion and adjusted EPS at $1.58, down from the prior $101.1 billion and $1.63, respectively.
Bottom line, Rusch rates Tesla shares as a Market Perform (i.e., Neutral), without suggesting a fixed price target. (To watch Rusch’s track record, click here)
Other analysts do have price targets and right now, the average stands at $340.50, suggesting the shares will remain rangebound for the time being. All told, the stock claims a Hold consensus rating, based on a mix of 13 Holds, 12 Buys, plus 10 Sells. (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.
