Goldman Sachs sees little upside for Tesla on falling sales volume

Goldman Sachs lowered its price target for Tesla to $285, citing weakening delivery data in key regions like the US, Europe, and China, coupled with souring consumer sentiment. Analyst Mark Delaney noted significant year-over-year sales declines, particularly in Europe, leading to reduced Q2 delivery expectations of 365,000 units, down from a previous estimate of 410,000. The revision also reflects concerns over CEO Elon Musk's political controversies, which contributed to a 14% stock drop on Thursday that erased $152 billion in market value, although shares recovered 5% on Friday.

Analysis

Goldman Sachs has revised its outlook on Tesla, lowering the price target to $285 while maintaining a neutral rating, indicating a marginal 0.10% upside from Thursday's closing price and positioning it below the LSEG analyst consensus of $289.20. This adjustment stems from concerns over weakening global sales volumes and souring consumer sentiment, with specific delivery weaknesses noted in Europe, the US, and China. Analyst Mark Delaney highlighted that European sales experienced a 50% year-over-year decline followed by a further double-digit drop in May 2024, while sales in Britain, Germany, and Italy plunged for five consecutive months through May. Although Chinese sales in April and May showed a slight increase from the first two months of the year, they still marked a 20% year-over-year decline. These fundamental challenges, coupled with CEO Elon Musk's highly publicized feud with President Donald Trump regarding potential changes to EV tax credits, contributed to a significant 14% drop in Tesla's shares on Thursday, wiping out $152 billion in market value, though the shares recovered by 5% on Friday. Consequently, Goldman Sachs has reduced its Q2 2025 delivery forecast for Tesla to 365,000 units, a notable decrease from their previous estimate of 410,000 and below the Visible Alpha Consensus Data of 417,000, and has also lowered annual delivery forecasts for 2025, 2026, and 2027, reflecting a growing apprehension about the company's immediate future.

Key Decisions for Investors

• Investors should consider the heightened near-term risks for Tesla, as reflected in Goldman Sachs' reduced price target, lowered delivery forecasts, and the stock's recent significant volatility stemming from both operational headwinds and leadership controversies.
• It is advisable to closely monitor upcoming official delivery figures from key regions such as Europe, the US, and China, alongside evolving consumer sentiment data and any developments related to EV subsidies or penalties.
• Carefully evaluate the potential impact of CEO Elon Musk's ongoing political engagements and public statements on Tesla's brand, investor confidence, and its relationship with regulatory bodies, which could influence future growth and profitability.