Tesla Recognized as a “Leader in Real-World AI” by Bank Amid Price Target Reduction Due to Delivery Delays

This is not investment advice. The author has no position in any of the stocks mentioned.

Baird, an investment bank, has recently revised its price target for Tesla shares, signaling caution regarding potential short-term challenges that could affect the stock’s performance. The new target is set at $370, down from a previous $440, although the bank maintains an Overweight rating on Tesla. Analyst Ben Kallo pointed out that both demand and supply-side risks could impact Tesla’s delivery figures. In his analysis, he referenced key comments from Elon Musk during the Q4 earnings call, which discussed a retooling process for the Model Y at Tesla’s production facilities, likely producing a short-term disruption to output.

Concerns Over Q1 Vehicle Deliveries

February and early March have prompted several investment banks to warn that Tesla may face challenges in meeting its Q1 delivery estimates for 2025. The company has recorded a notable decline in vehicle deliveries across several European markets and in China. Speculation arises as to whether these diminished figures are influenced by Musk’s political engagements or the ongoing Model Y refresh. Consequently, Tesla’s stock has plunged 26% year-to-date, reducing its post-election gains to just 11%.

Baird’s recent investor communication highlights concerns over the company’s delivery figures, citing that “intra-quarter sales data from TSLA’s key regions lead us to believe there is risk to the consensus Q1 delivery estimate of 437.5K.”This apparent risk is attributed to constraints on both the demand and supply fronts, with Baird mentioning Musk’s political activities as a factor adding “uncertainty”to demand while also noting that “downtime associated with the Model Y refresh complicates the supply-side of the equation.”

Despite these challenges, Baird perceives these headwinds as temporary. The firm estimates that approximately 300, 000 Model Ys could be delivered during the quarter, articulating its long-term confidence in Tesla: “we continue to view TSLA as a core holding and see the company as the leader in real-world AI.”They stressed that the downtime caused by the Model Y updates could jeopardize the Q1 delivery totals. Musk had articulated during the Q4 2024 earnings call that “now Q1, we’ve got this massive factory retooling for the New Model Y, for example, that obviously has a short-term impact on output.”

Furthermore, Baird has adjusted its estimates for Tesla’s Q1 2024 following the firm’s update to its Model 3 manufacturing lines. Despite the challenges in 2024 for the electric vehicle (EV) market, Tesla’s stock has appreciated by 56% over the year. However, Tesla is not the only automaker facing pricing adjustments—Bank of America has recently slashed Tesla’s price target by 22%.In contrast, Morgan Stanley has designated Tesla as a top investment choice among U. S.auto manufacturers. While Tesla grapples with delivery uncertainties, other automakers like General Motors and Ford are contending with supply chain disruptions stemming from tariffs on imports from Mexico and Canada.

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