Tesla's Stock Received Its Lowest Price Target From a Bull. Still, It Implies an Upside of 39%

RBC Capital Markets lowered its price target for Tesla Inc. on Tuesday, reducing it by 27% from $440 to $320. The adjustment reflects a more cautious outlook on the company’s self-driving software business and the anticipated rollout of its robotaxi service in Europe and China.

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Despite this downgrade, RBC analyst Tom Narayan maintained a buy rating on Tesla’s stock, downplaying fears of significant sales declines in China and Europe. He argued that these markets represent a smaller portion of Tesla’s overall business compared to the U.S., where sales have shown moderate growth.

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Narayan’s revised price target is now the lowest among analysts who still rate Tesla as a buy and one of the few that fall below $400. However, with Tesla closing at $238.01 on Monday, the new target still suggests a potential 39% upside.

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Meanwhile, Tesla faces increasing competition from Chinese electric vehicle maker BYD Co., which recently introduced its Super e-Platform. This technology allows vehicles to charge up to 400 kilometers of range in just five minutes. BYD’s announcement could heighten the competition in the EV sector, putting additional pressure on Tesla’s position in global markets.

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On Tuesday, Tesla shares declined 6.1%. RBC focused on Tesla’s self-driving technology as a key area of concern, cutting its estimate for the company's monthly subscription fee for full self-driving (FSD) software in half—from $100 to $50. This revision was influenced by moves from competitors such as Mercedes, Aptiv, and BYD, which have been incorporating autonomous features as standard offerings rather than using them as major revenue drivers.

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“Many automakers are choosing to provide autonomy features as a product differentiator rather than a profit center,” Narayan explained.

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In addition, RBC reduced its projected market share for Tesla’s robotaxi service in China and Europe from 20% to 10%, citing intensifying competition from domestic manufacturers. Narayan believes that local companies are more likely to dominate these markets, making it more challenging for Tesla to gain a foothold.

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Despite concerns over Tesla’s declining monthly sales in some regions, RBC pointed to potential catalysts ahead. Narayan suggested that many consumers might be postponing purchases while waiting for the upcoming Model 2 and the refreshed Model Y, which could drive stronger performance in the second and third quarters.

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RBC wasn’t the only firm adjusting expectations for Tesla. On Monday, Mizuho cut its price target for the company by 16.5%, reducing it from $515 to $430. Analysts at Mizuho expressed concerns over Tesla’s sales performance, which they described as having “significantly underperformed” across key regions.

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Tesla has also faced backlash related to CEO Elon Musk’s political affiliations. His ties to the Trump administration and its Department of Government Efficiency (DOGE) have sparked protests at Tesla facilities, acts of vandalism against Tesla vehicles, and even confrontations between demonstrators and Tesla owners. Additionally, Musk’s recent public support for far-right figures in Europe has led to consumer boycotts in several countries.

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Tesla shares have taken a significant hit this year. With Tuesday’s decline, the stock is now down 44.5% in 2025, making it the worst-performing stock in the S&P 500. In contrast, the S&P 500 itself has fallen just 3.5% year-to-date.

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Looking Ahead

As Tesla navigates growing competition, regulatory hurdles, and political controversies, investors will be watching closely for signs of stabilization. The upcoming launch of new vehicle models and further developments in autonomous driving technology could play a key role in shaping Tesla’s performance in the months ahead.

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