Tesla(US:TSLA) The Motley Fool·2025-01-04 09:06Tesla Stock Performance and Market Sentiment - Tesla stock surged 61% from Nov 5 to the end of the year following the presidential election, nearly doubling before the Federal Reserve adjusted its interest rate cut forecast for 2025 [1] - Investors anticipate benefits from CEO Elon Musk's significant support for President-elect Trump, including campaign contributions and potential policy advantages [2] - Market optimism is tied to expectations that the Trump administration may streamline regulations for autonomous vehicles (AVs), aiding Tesla's Cybercab deployment and AV leadership [3] Tesla's Delivery Challenges - Tesla's Q4 2023 deliveries fell short of expectations at 495,600 vehicles, a 2.3% YoY increase but below the consensus estimate of 510,000, leading to a 6% stock drop [5] - Full-year 2023 deliveries declined for the first time, dropping from 1.81 million to 1.79 million despite the addition of the Cybertruck to the lineup [6] - Weak Q4 deliveries and evidence of demand challenges highlight potential headwinds for Tesla in 2025 [12] Demand and Competitive Pressures - Tesla faces a demand plateau, with early EV adopters already having made purchases and hybrid sales rising as an alternative [8] - Competition from cheaper Chinese EVs and other alternatives has intensified, while elevated interest rates have impacted vehicle sales across the auto industry [8] - Tesla's lack of updates to existing models and falling prices for used Teslas further indicate demand challenges [9] Regulatory and Policy Risks - The incoming Trump administration may introduce uncertainty, including the potential elimination of the $7,500 EV tax credit, making Teslas more expensive in the US [10] - While regulatory changes could boost Tesla's autonomy ambitions, the removal of EV incentives poses a significant risk [10] Future Outlook and Investor Considerations - Elon Musk forecasts 20% to 30% delivery growth for 2025, but this is seen as a test of demand rather than a guaranteed growth trajectory [12] - The anticipated launch of the budget-priced Model Q, priced under $30,000, could support growth, but Tesla faces multiple challenges, including weak Q4 deliveries, demand issues, and a lofty valuation [12] - Tesla's long-term upside potential lies in its autonomy bet, but 2025 could be a challenging year if Q4 trends persist [13] - Investors should monitor Q4 financial results for signs of pricing pressure and demand growth, as Tesla's stock performance may depend on breakthroughs in autonomy [14]