Wells Fargo Reiterates ‘Underweight’ Rating on Tesla
Wells Fargo analyst Colin Langan reiterated on September 11, 2025, its ‘Underweight’ rating on Tesla, with a $120 price target.
“Available TSLA Aug sales data remains weak despite the end of IRA on Sept 30.
Of the 3 major mkts we track, Aug TSLA deliveries are trending down 9% y/y, though 37% higher m/m.
Despite the m/m pop, Q3 deliveries are still at risk vs consensus.
Initial Thoughts
Sales Continue to Trend Lower Y/Y: Based on available US, EU & China sales data, TSLA sales are trending -9% y/y in August, -16% QTD & -14% YTD.
Visible Alpha consensus is forecasting Q3 deliveries of 438K; this would be down 5% from 463K last year, but up 14% from 384K in Q2.
The expected q/q increase into Q3 likely reflects US sales pull forward before the end of IRA.
Wards est. US is up 25% m/m & down ~2% y/y, while MI is more conservative +3% m/m & -3% y/y (using a different base est).
Europe & China Screen Lower Y/Y, but Pop M/M: The final ACEA European sales data will be released later this month.
However, sales for most of the major European markets have been released.
We tracked 11 major EU markets that accounted for ~74% of TSLA sales in 2024. These markets are down 21% y/y in August, and -33% y/y on YTD basis (see Exhibit 3).
China sales & exports were recently released. TSLA domestic retail sales fell 10% y/y, however, rose 41% m/m.
Target Price Valuation: $120 from NC
Our base case outlook is consistent with global auto sales of 8.2M in 10 years, 12% EBIT margins, no dilution, and a 30x multiple in 10 years.
Our $120 price target reflects the output of our 3-stage DCF analysis of the core auto business assuming a 13% WACC, 10% mid-term growth, and a 10% terminal growth rate.
Upside Risks
- New capacity additions
- Positive news on Optimus Progress
- Positive reviews of the FSD update
- Addition of a US EV credit within the proposed stimulus bill
- Decline in commodity prices
- New market expansion in solar or storage.”
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