Tesla (NASDAQ: TSLA) is facing a rocky start to 2025, with its stock plummeting over 6% on March 4, trading at $267.22 at press time.
The electric vehicle (EV) giant has now shed over 34% of its value year-to-date, significantly underperforming the Nasdaq, which has declined nearly 6% in the same period.
Mounting headwinds, including weaker-than-expected Q4 earnings, sluggish vehicle deliveries, and intensifying competition from both legacy automakers and rising EV startups, continue to pressure Tesla’s stock, erasing billions in market value.
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On February 26, the sell-off dragged Tesla’s market capitalization below $1 trillion for the first time in months.
However, the latest blow comes from fresh data released by the China Passenger Car Association (CPCA), showing a sharp drop in Tesla’s sales in China, one of its most crucial markets.
Tesla’s China sales tumble as competitors widens lead
Tesla’s struggles in China have deepened, with wholesale shipments plummeting 49% year-over-year to just 30,688 vehicles in February, the lowest monthly sales since August 2022.
In the first two months of 2025, the company sold 93,926 China-made vehicles globally, marking a 28.7% decline from the same period last year, according to CPCA data.
While January and February are traditionally weaker months for Chinese auto sales due to the Chinese New Year holiday, Tesla’s steep decline rattled investors, especially as other EV makers saw stronger momentum.
BYD, Tesla’s biggest rival in China, saw its February sales surge 164% year-over-year to 322,846 vehicles, while Li Auto (NASDAQ: LI) and Nio (NYSE: NIO) also reported strong annual growth, intensifying the pressure the company faces in maintaining its foothold in the world’s largest EV market.
Tesla’s weak performance in China comes on the heels of a steep decline in European sales, further deepening concerns about the company’s ability to sustain demand across key markets.
In February, Tesla’s struggles in Europe worsened, with sales in France plunging 26% year-over-year, extending a 45% decline across major European EV markets in January.
The downturn has also hit Scandinavia, where registrations dropped between 42% and 48% in Sweden, Norway, and Denmark.
With sales sliding across major global markets, concerns over Tesla’s ability to sustain its growth momentum are intensifying, prompting several analysts to revise their price targets.
Bank of America slashes Tesla stock price target amid mounting challenges
Bank of America (BofA) has slashed Tesla’s price target from $490 to $380 while maintaining a ‘Neutral’ rating, citing declining vehicle sales, brand perception risks, and uncertainty around key product launches.
The firm highlighted Tesla’s 45% year-over-year sales drop in the EU in January, lack of updates on its low-cost model, and potential delays in the Robotaxi rollout as key concerns.
Considering these challenges, BofA has lowered its valuation of Tesla’s automotive business from 10-times EV/EBITDA to 9-times in its sum-of-the-parts analysis.
Despite these concerns, not all analysts are bearish on Tesla’s outlook. Morgan Stanley analyst Adam Jonas reaffirmed his bullish stance, naming Tesla as the firm’s top pick in the U.S. auto sector. Jonas maintained an ‘Overweight’ rating and a $430 price target.
While acknowledging that Tesla’s delivery numbers have been underwhelming, Morgan Stanley does not see this as a long-term narrative shift. Instead, Jonas believes that Tesla is evolving from a pure-play EV maker into a diversified company, with growth expected to come from AI, robotics, and energy solutions.
The analyst also noted that while 2025 deliveries could decline year-over-year, this could create an attractive buying opportunity for long-term investors.
Featured image via Shutterstock
