Image Source: Pexels

Tesla (TSLA) is experiencing a significant sales decline across key markets, particularly in Europe, where monthly sales plunged by nearly half in April 2025. Despite these concerning trends, Wall Street analysts are increasingly bullish on the electric vehicle maker’s long-term prospects, with some firms raising price targets to street-high levels based on Tesla’s artificial intelligence and autonomous driving ambitions.

Tesla Sales Plunge in the European Market
 

Tesla’s European operations are experiencing a severe downturn, with sales across 32 European countries tumbling 49% to just 7,261 vehicles in April 2025, down from 14,228 in the same month the previous year. This dramatic decline comes as the broader electric vehicle market in Europe actually grew by approximately 28%, highlighting Tesla’s specific challenges.

The sales collapse extends beyond a single month, with Tesla’s European sales falling roughly 39% to 61,320 vehicles for the first four months of 2025, while the continent’s overall auto market showed little change during the same period.

The decline is attributed to multiple factors, including protests and boycotts over Elon Musk’s political involvement, an aging model lineup, and intensifying competition from Chinese EV brands like SAIC, which saw sales rise 54% in April.

Additionally, Tesla faced operational challenges with factory shutdowns for several weeks while upgrading its best-selling Model Y sport utility vehicle, which constrained supply. The company’s struggles are further compounded by US President Donald Trump’s trade war, which has reportedly turned Europeans away from American brands, with Trump threatening a 50% tariff on EU goods before agreeing to delay duties until July.

Analysts Remain Upbeat on Tesla’s Long-Term Ambitions as an AI Company
 

Despite the sales challenges, Wall Street analysts remain remarkably optimistic about Tesla’s future prospects.

Wedbush Securities has issued the most bullish call, raising Tesla’s price target to a street-high $500 from $350, implying approximately 47% upside potential. Analyst Daniel Ives positions Tesla as “one of the best pure plays on AI for the next decade,” emphasizing the company’s artificial intelligence and full self-driving (FSD) ambitions as key value drivers.

Cantor Fitzgerald has also maintained its $355 price target with an Overweight rating, highlighting Tesla’s ambitious plans to deploy fully autonomous robotaxis starting with a modest fleet in Austin by the end of June 2025. The initial phase will involve Model Y vehicles equipped with unsupervised Full Self-Driving technology, with expectations to scale up and expand into other cities by year-end.

Key catalysts identified by analysts include the rollout of FSD in China (which began in Q1 2025), expected deployment in Europe during the first half of 2025 pending regulatory approval, and high-volume production of the Optimus Bot slated for 2026 with initial customer deliveries projected for 2027. Wedbush’s Ives forecasts that Tesla’s autonomy and robotaxi service could unlock approximately $1 trillion in AI-related valuation, potentially propelling the company’s market capitalization to $2 trillion by late 2026.

Divergence Between Tesla’s Short-Term Performance and Long-Term Potential
 

The contrast between Tesla’s current operational challenges and analyst expectations creates a fascinating market dynamic. While Tesla’s FSD technology has accumulated over 3.5 billion miles with supervision as of Q1 2025, the company faces immediate headwinds from macroeconomic conditions, tariffs, and the anticipated removal of EV tax credits.

Analysts acknowledge these near-term challenges but remain focused on Tesla’s technological transformation. The company’s strong financial position, with a current ratio of 2.0 and more cash than debt on its balance sheet, provides resilience against current headwinds. Tesla also plans to introduce a lower-priced vehicle in the first half of 2025, starting around $30,000 including tax credits, which could align well with market conditions.

Elon Musk’s confirmed commitment to Tesla for the coming years, even as he prepares to conclude his role at DOGE, has provided additional reassurance to analysts. The company is expected to update its 2025 automotive growth targets and energy storage outlook next quarter, aiming for over 50% year-over-year growth following more than 100% increase in FY24.

Tesla Stock Gains on Early Tuesday Trading
 

As of May 27, 2025, at 10:31 AM EDT, Tesla stock (NASDAQ: TSLA) was trading at $357.42, up $18.08 (+5.33%) with the market open. The stock has shown significant volatility, with a 52-week range of $167.41 to $488.54, and currently trades near the higher end of this range with a market capitalization of $1.151 trillion.

Tesla’s valuation metrics reflect its premium positioning, with a trailing P/E ratio of 193.91 and forward P/E of 158.73. The company maintains strong financial health with $37 billion in total cash and a debt-to-equity ratio of just 17.41%. Despite the recent sales challenges, Tesla generated $95.72 billion in trailing twelve-month revenue with a profit margin of 6.38%.

The analyst community shows mixed sentiment with price targets ranging from a low of $115.00 to Wedbush’s high of $500.00, with an average target of $299.38.

This wide range reflects the significant uncertainty around Tesla’s transition from a traditional automaker to an AI and robotics company, with current trading levels suggesting the market is pricing in substantial future growth from autonomous driving and energy storage initiatives.

More By This Author: