Tesla (NASDAQ: TSLA) stock could decline over 40%, according to the outlook by banking giant UBS, which reaffirmed its bearish stance on the electric vehicle (EV) manufacturer.
In an investor note on May 27, UBS analyst Joseph Spak reiterated his ‘Sell’ rating on Tesla, maintaining a price target of $190 per share, a 43% drop from the last market closing value of $339.
Why UBS is bearish on TSLA stock
This decision comes as the firm’s latest global EV adoption survey points to waning interest in Tesla and its vehicles across key markets.
Spak highlighted the findings from UBS’s 9th wave of the Evidence Lab Global EV Adoption Outlook Consumer Survey, which suggests that Tesla’s appeal is slipping in the United States, China, and Europe, each for different reasons.
The analyst pointed to a case of “saturation ” in the U.S. Tesla currently holds around 48% of the domestic battery electric vehicle (BEV) market, and consumers are increasingly wary of its limited lineup and the high cost of its vehicles. Affordability concerns and the lack of fresh models may limit the company’s growth prospects in the country.
Over in China, the situation is more competitive. Local players are stepping up with cutting-edge technology and aggressive pricing, leaving Tesla struggling to maintain its edge. Once seen as a trailblazer, many Chinese consumers now view Tesla as a tech follower, and its brand allure appears to be fading.
Meanwhile, Tesla’s image has taken a hit in Europe, with UBS attributing the damage partly to CEO Elon Musk’s political statements and public persona. Spak noted that this has likely led to brand fatigue and eroded Tesla’s once-loyal European customer base.
Tesla’s challenging future
While many investors remain excited about Tesla’s long-term prospects, especially its plans for autonomous vehicles and humanoid robots, UBS struck a cautious tone.
Spak warned that mounting challenges in Tesla’s core automotive business and the potential removal of California’s emissions waiver could impact the company’s financial performance.
“Overall, we remain cautious on Tesla stock. While we understand the enthusiasm over robo-taxis and humanoid robots, the automotive business faces mounting challenges and a source of earnings and cash flow may be at risk with the potential removal of the California waiver,” Spak said.
Indeed, this follows Tesla’s plan to launch its robotaxi service in Austin in early June, which remains a key aspect of the company’s growth strategy.
At the same time, investors are anticipating a potential recovery for the company after Musk announced his full focus on the CEO role away from his controversial government position.
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