Tesla shares slide another 5% on Thursday: here’s why

Baird has added Tesla as a Bearish Fresh Pick, citing near-term headwinds related to production challenges and weakening demand.

Shares of Tesla were down over 5% as the markets opened on Thursday. The TSLA stock has slumped around 28% in the last 30 days.

The firm highlighted risks to Tesla’s first-quarter delivery estimates, pointing to production downtime associated with the Model Y refresh as a key factor.

“Intra-quarter sales data from TSLA’s key regions lead us to believe there is risk to the consensus Q1 delivery estimate of 437.5K,” Baird stated, revising its own estimate down to 369.4K.

Analysts noted that Tesla typically delivers around 300,000 Model Ys per quarter, but the production pause adds downside risk.

CEO Elon Musk had previously flagged this issue on Tesla’s fourth-quarter earnings call.

Adding to concerns, sales data from Tesla’s major markets—Europe, the US, and China—have shown year-over-year declines.

Beyond production and demand challenges, Baird also pointed to “key man risk” related to Musk’s political and cryptocurrency involvement.

“We believe Musk’s involvement with DOGE and the Trump administration broadly may affect some buyers in the US and Europe, which complicates the setup from a demand perspective,” analysts wrote.

Despite near-term caution, Baird remains positive on Tesla’s long-term potential, citing initiatives like the Optimus robot, robotaxi service expansion, and more affordable vehicle launches.

The firm lowered its price target from $440 to $370, maintaining a premium valuation due to Tesla’s growth potential.

Earlier in the week, Morgan Stanley reinstated Tesla as its “Top Pick” in the US auto sector, setting a price target of $430.

Tesla’s sales decline in key markets

Tesla is facing increasing sales pressure across multiple regions, with its China-made EV sales dropping 49.2% year-over-year in February to 30,688 units—the lowest since August 2022, according to CPCA data.

The company’s January-February sales totaled 93,926 vehicles, marking a 28.7% decline from the same period last year.

Tesla’s performance in China has been hit by an intensifying price war with domestic competitors, particularly BYD, which saw a 90.4% increase in passenger vehicle sales last month.

In Europe, Tesla’s sales dropped sharply in January, with registrations falling 45% to 9,945 units, according to the European Automobile Manufacturers’ Association (ACEA).

Germany saw one of the steepest declines, with Tesla’s registrations dropping to 1,277 vehicles, the weakest since July 2021.

France recorded a 63% decline, while Tesla lost ground to BYD in the UK for the first time.

Despite Tesla’s struggles, the broader European EV market showed resilience, with battery-electric car sales rising 34% in January to 124,341 units, securing a 15% market share.

One potential factor contributing to Tesla’s sales slump in Europe is growing consumer resistance to Musk’s political activism.

His recent endorsement of Germany’s far-right Alternative for Germany (AfD) party ahead of elections may have played a role in Tesla’s 60% year-over-year decline in Germany, Europe’s largest car market.

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