Morgan Stanley Lowers Tesla Price Target to $410

Morgan Stanley analyst Adam Jonas lowered the price target on Tesla (NASDAQ: TSLA) to $410 (from $430) while maintaining an Overweight rating.

“We reiterate our view that while Tesla’s YTD auto deliveries have been mostly below expectations, it is not particularly narrative changing for our investment thesis.

With this report, we lower Tesla’s auto deliveries for both the first quarter and the full year driven by competition, an aging lineup and a buyers’ strike from negative brand sentiment and upcoming new product – FY25 lowered to 1,615k (- 9.8% y/y) vs.

1,924k (+7.5% y/y) previously and FY30 lowered to 4.7mn vs. 5.2mn previously.

Our conversations with investors and recent survey showed that investors are beginning to contemplate lower y/y volume (with 21% expecting deliveries down by more than 10% y/y), a marked shift from our Tesla Bull Bear Lunch in January where sentiment on full year growth was far more bullish.

The slower delivery ramp lowers our Core Auto contribution to our lowered price target (now less than 20% of our $410 PT) and flows through to lower Network Services valuation ($161 of our $410 PT) due to a lower Tesla car park on which to attach high margin recurring services.

Tesla January sales disappointed across the board with Europe sales -45% y/y (according to Bloomberg), China retail sales -15% y/y and tracking lower vs. local EV OEMs (BYD up over 45% y/y), and US January sales -16% y/y (from Motor Intelligence).

The softness continued into February, though the rate of decline y/y may incrementally be moderating in some regions.

In the US, Tesla Model Y February sales declined 23% y/y; in Europe, Tesla February sales declined 26% and 76% y/y in France and Germany, respectively.

In China, YTD data has come in weaker than expectations, though the most recent data reported by Greater China Autos analyst Tim Hsiao has shown weekly sequential upticks in March.

Tesla has registered orders of 14-16k for the week of March 10-17, up from orders of 13-15k for the week of March 3-10, and up from 11-13k the week prior.

We accordingly lower 1Q25 deliveries to 351k (-9.3% y/y) vs. 415k (+7.3% y/y) previously.”

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