Investing.com -- Wolfe Research sees Tesla’s upcoming robotaxi launch as the most critical factor driving the stock in 2025, even as the company faces ongoing challenges in its core automotive business.
The firm’s analysts remain cautious about Tesla’s near-term performance but note that "Robotaxi performance is likely to be the key driver of the stock in 2025."
Tesla’s Q1 outlook appears particularly difficult due to "seasonality and planned MY downtime," with Wolfe estimating auto gross margins (excluding credits) to drop to 13.0% from 13.6% in Q4.
The firm also highlights uncertainty around Tesla’s upcoming affordable vehicle lineup, expected to begin launching in the first half of 2025.
While visibility remains low, analysts believe "margins could improve quickly, given limited incremental fixed costs and likely lower variable costs vs Model Y."
Regulatory risks could also weigh on Tesla (NASDAQ:TSLA), with potential U.S. policy changes, including a possible repeal of the IRA leasing loophole, which affects "10%-15% of Tesla’s US deliveries."
Additionally, the firm believes new tariffs could lead to "a ~$1.6 bn annualized headwind" for Tesla’s auto segment, particularly as it sources energy business components from China.
Despite these challenges, investors remain focused on Tesla’s autonomy efforts. Wolfe expects the company to launch its first robotaxi rideshare service in Austin in June, at which point "the market [will] start honing in on several key service metrics."
These are said to include the "safety performance of unsupervised FSD," the cost structure of the service, and Tesla’s ability to retain users.
While Wolfe remains on the sidelines with a Peer Perform rating on Tesla, noting concerns over Tesla’s valuation and execution risks, the firm acknowledges that Tesla remains a "catalyst-driven stock" with AI and autonomy developments on the horizon. For now, they advise investors to "remain on the sidelines ahead of this event."