Tesla Inc (TSLA) Stock: Wall Street Still Bullish Despite European Sales Nightmare

TLDR

Tesla stock fell 1.1% in premarket trading after rising 6.7% following US-China tariff pause Chinese EV sales dropped nearly 9% year-over-year in April, with Tesla shipments from China down 6% Trump’s tax plan would eliminate EV purchase tax credits by end of 2025 Cantor Fitzgerald maintains “Overweight” rating with $355 price target despite European sales slump Tesla faced major sales drops in European markets: UK (-62%), Denmark (-67%), Netherlands (-74%), and Sweden (-81%)

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Tesla shares dipped 1.1% early Tuesday, trading at $314.99 in premarket activity. This decline followed Monday’s 6.7% gain that pushed the company back over the $1 trillion market cap threshold.

Tesla, Inc. (TSLA)

The stock’s movement comes amid mixed news for the electric vehicle maker. Monday’s surge was driven by improved US-China trade relations.

Chinese and US officials announced a 90-day pause on steep import tariffs following weekend talks in Switzerland. Before this temporary truce, tariffs on both sides exceeded 100%.

These high tariffs had effectively created a trade embargo between the world’s two largest economies. The pause offers Tesla a reprieve in what has been a challenging global market.

Chinese consumers had been avoiding American products as trade tensions escalated. This trend hurt Tesla in what remains one of its most important markets.

April data showed Chinese EV sales dropping almost 9% compared to last year. Tesla’s own shipments from China fell 6% year-over-year, totaling 58,459 units according to the China Passenger Car Association.

Despite these challenges, the electric vehicle market in China is projected to grow, with wholesale deliveries expected to increase 42% year-on-year.

European Sales Struggles

Tesla’s difficulties extend beyond China into European markets. Recent data reveals steep sales declines across multiple countries.

In the UK, Tesla’s April new vehicle sales plummeted 62% compared to last year. The situation was even worse in other European markets.

Denmark saw Tesla sales drop 67% year-over-year. The Netherlands experienced a 74% decline. Sweden recorded the steepest fall at 81%.

Vehicle registrations also declined across Spain, Belgium, Germany, and France. These figures highlight Tesla’s current struggle in European markets where EV competition continues to intensify.

Despite these concerning numbers, Cantor Fitzgerald has maintained its confidence in Tesla’s long-term prospects.

Analyst Outlook Remains Positive

Cantor Fitzgerald analyst Andres Sheppard acknowledged the stark contrast between current sales figures and those from the previous year. Yet the firm kept its “Overweight” rating on Tesla stock with a $355 price target.

This rating suggests Cantor Fitzgerald believes Tesla stock has better return potential than the average of other companies in its coverage universe over the next 12-18 months.

The maintained price target indicates confidence in Tesla’s ability to navigate current market challenges. The company has delivered a 77% return over the past year.

Tesla’s current P/E ratio stands at 156.23, suggesting a premium valuation compared to industry standards. The company maintains strong financials with a current ratio of 2.0 and annual revenue of $95.72 billion.

Meanwhile, Piper Sandler has also maintained an “Overweight” rating with an even higher $400 price target. Their analysis emphasizes the importance of Tesla’s Full Self-Driving (FSD) software in the company’s valuation.

Trump Tax Plan Impact

Investor attention is now shifting back to the US market, where policy changes could affect Tesla and the broader EV industry.

On Monday evening, The House Ways and Means Committee published a markup of a bill intended to be part of President Trump’s “One Big Beautiful Bill.” The proposed legislation includes several tax modifications.

The markup would eliminate EV purchase tax credits by the end of 2025. This change would remove a benefit that currently allows EV buyers to qualify for up to a $7,500 tax deduction.

However, the markup also introduced a provision allowing deduction of auto loan interest from taxable income for cars manufactured in America. This provision could benefit Tesla, which produces all US-sold vehicles domestically.

Analysts suggest that while losing the EV credit outweighs the benefit of tax-deductible auto loan interest, both changes were widely anticipated by the market.

In the first quarter of 2025, Tesla sold 6,406 Cybertrucks in the US, representing a 128.5% increase year-over-year according to Cox Automotive.

The company has also been strengthening its global supply chain. Tesla recently integrated over 60 Chinese suppliers into its global procurement system, as confirmed by company vice president Tao Lin.

This move aims to incorporate these suppliers into Tesla’s international operations, potentially helping navigate the complex trade landscape between the US and China.

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