This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
Investment bank Baird has cut its Tesla share price target as it cautions investors about short-term headwinds to the stock. In its note, Baird reduced Tesla's share price target to $370 from $440 and kept an Overweight rating on the shares. Analyst Ben Kallo added that Tesla faces demand and supply side risks to its deliveries. He focuses on Tesla's Model Y refresh and quotes Elon Musk's Q4 earnings call comments, where the executive outlined that Model Y retooling at Tesla's factories would create a short-term impact on Tesla's output. Over the long term, Baird remains optimistic about Tesla's narrative as an AI stock and views the firm as a "core holding long term."
Baird Cites Delivery Data To Cast Doubt Over Tesla's Consensus Q1 Vehicle Delivery Estimate
The tail-end of February and March's start has seen several investment banks caution about Tesla struggling with its deliveries in 2025. The firm's deliveries in several European countries and China have significantly dropped, with the jury still out on whether Musk's political activities or a Model Y refresh are behind the slow start to the year. On the back of these worries, Tesla's shares have dropped by 26% year-to-date, trimming down the stock's post-election gains to 11%.
Baird's latest investor note for Tesla reduces the firm's share price target to $370 from $440. However, it keeps an Overweight rating on the shares. The reason behind the price target cut is a potential Q1 delivery miss. Baird notes that "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."
The risk stems from demand and supply side constraints, outlines the investment bank. On the demand side, it notes "Musk’s involvement with the Trump administration" as adding "uncertainty" and adds that "downtime associated with the Model Y refresh complicates the supply-side of the equation."
However, these are short-term headwinds, according to Baird. While estimating that roughly 300,000 Model Ys are delivered in the quarter, Baird also continues "to view TSLA as a core holding long term and see the company as the leader in real-world AI." It believes the Model Y "downtime adds risk to the Q1 total" and shares that Musk stated during Tesla's Q4 2024 earnings call that “now Q1, we’ve got this massive factory retooling for the New Model Y, for example, that obviously has a short-term impact on output."
Baird also notes that it lowered Tesla estimates in Q1 2024 after the firm's update of its Model 3 manufacturing lines. Over the year, Tesla's shares have gained 56% despite 2024 being a sluggish year for the EV market and the aforementioned Model 3 production upgrades.
The price target cut isn't the only one so far. Earlier, Bank of America slashed Tesla's share price target by 22%, while Morgan Stanley added the stock as a top pick among US automobile manufacturers. While Tesla has struggled with delivery concerns, other car manufacturers, notably General Motors and Ford, have had to deal withh the fallout of tariffs on Mexico and Canada and their impact on the supply chain.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
Follow Wccftech on Google to get more of our news coverage in your feeds.
