Tesla (TSLA) is worth $130 due to weak fundamentals, strong competition, says HSBC

Tesla (TSLA) has weak fundamentals and strong competition, according to a new HSBC pricing the stock at $130 – less than half its current price.

Wall Street analysts are currently rushing to update their analyses of Tesla before the company reports its Q1 delivery results next week.

Analysts started the quarter believing on average that Tesla would deliver about 464,000 vehicles this quarter – down from Q4 2024, but significantly up year-over-year.

However, as we reported earlier this month, they have been overly optimistic and had to regularly lower their estimates throughout the last month.

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Now, the Wall Street consensus is for Tesla to deliver 398,000 vehicles in the first quarter, but it likely will go down in the coming days as several analysts haven’t updated their estimates since last month.

HSBC analyst Michael Tyndall updated his own estimate today, and he now expects Tesla deliveries to arrive at 385,000 units—though he could see them come down as low as 343,000 units.

He wrote in a note to clients today:

Tesla eschews many of the industry norms (holding list prices firm, making regular facelifts and model renewals) and has to date seen only minimal impact, but tougher competition and brand erosion is likely to see the impact of its strategy hurt more.

Tyndall admits that much of Tesla’s Q1 issues are related to the Model Y changeover, but he thinks that the brand issues and EV competition are on going concerns for the company.

He expects Tesla to downplay the brand issues and use Model Y changeover for the lower Q1 deliveries:

“We suspect the messaging at Q1 will be that the issues are temporary and the future remains bright. We doubt brand issues will be discussed.”

Tyndall has reduced his price target on Tesla from $165 to $130 a share.

Electrek’s Take

Tesla currently trades higher than this time last year when analysts thought Tesla would deliver over 3 million vehicles in 2025.

Now, the consensus is at 1.9 million units, and I would expect it to drop to 1.6 million after the delivery results next week.

On top of delivery volumes, Tesla’s gross margins have consistently been decreasing. It’s now clear that the concept of “millions of robotaxis overnight” is fading away as Tesla pivots to a geo-fenced ride-hailing service with an internal fleet.

Tesla Semi is probably the only program worth being relatively bullish about, but the rest of the company appears to be in shambles. Growth is gone, and gross margins are down.

Now, Tesla shareholders are hoping that tariffs, which are going to make Tesla vehicles more expensive, are going to help the company because they are also going to make other EVs even more expensive.

That goes against logic as history has shown that increasing car prices always reduce car sales.

On top of it, that’s just in the US. Tesla is likely going to face regulatory issues in other markets in retaliation for the Trump tariffs in the US.

Tesla is going to have a tough year.