The new policies of Trump drag down, Tesla's sales in 2025 are likely to fall short of Musk's target
Two-thirds of Tesla's sales in the United States benefit from tax credits, and the new policies under Trump may have a significant impact on it. Analysts expect Tesla's car sales to reach 2.07 million units this year, a year-on-year increase of 16%, which is far lower than Musk's prediction of 20%-30% last October, and also lower than the average annual growth rate of about 40% in the previous two years
Considering Trump's efforts to abolish the climate policies that benefited electric vehicles during Biden's administration, Wall Street banks expect that Tesla's vehicle sales growth in 2025 will be far below the expectations of co-founder Elon Musk.
Tesla will announce its fourth-quarter financial report this Wednesday. According to analyst forecasts compiled by FactSet, Tesla's vehicle sales are expected to reach 2.07 million units this year, a year-on-year increase of 16%. Although this figure represents a rebound from last year, it is far below Musk's prediction of 20% to 30% growth made last October and lower than the approximately 40% annual growth rate of the previous two years.
"Boosting sales" before the new policy takes effect, "severely impacting" after it takes effect
Last week, according to CCTV News, Trump announced that he would sign a series of executive orders, including ending the Biden administration's "Green New Deal" and revoking electric vehicle incentives to save the traditional American auto industry. The executive order states that it will consider "canceling unfair subsidies and other unreasonable government market interventions." Analysts believe that if Trump cancels the $7,500 tax credit for each electric vehicle, Tesla will be particularly hard hit. According to Barclays analyst Dan Levy, about two-thirds of Tesla's U.S. sales benefit from these tax credits.
However, considering that changes to electric vehicle subsidy policies may take effect starting in 2026, some analysts believe this could stimulate buyers to accelerate their purchases in the second half of 2025 to complete transactions before the policy changes, potentially boosting Tesla's sales figures. Levy predicts:
"There will be a large-scale early purchase of electric vehicles in the second half of 2025, followed by a decline in sales in 2026."
Other analysts believe that the trend of early purchases has already begun to drive Tesla's sales.
However, regarding the scale of early purchases, some analysts are skeptical. BNP Paribas Exane estimates that this year's sales growth could be as low as 12%. Tesla investors are also concerned about pressures in the electric vehicle market, external competition, and slowing sales growth of the Cybertruck. Last year, due to high prices and a lack of new models, overall electric vehicle sales in the U.S. slowed, with a market share of 8%, only slightly up from 7.6% in 2023.
Meanwhile, Musk's strong support for Trump and his interventions in political issues in the UK, Italy, and Germany may also deter some potential customers. According to data from the European Automobile Manufacturers Association (ACEA), Tesla's electric vehicle sales in the EU are expected to decline by 13% year-on-year in 2024.
Ginny Buckley, founder of the electric vehicle purchasing advice website Electrifying.com, stated:
"Tesla was once the market leader and still is in many ways, but people are losing interest in it."
Tesla's long-term prospects remain optimistic, with artificial intelligence becoming a new highlight
In addition, Tesla's aging product lineup is another concern for investors. Since the launch of the Model Y SUV in 2020, its only new model has been the Cybertruck, priced starting at $82,000, with quarterly sales ranging between 9,000 and 12,000 units. Last year, Tesla canceled the new $25,000 model, publicly referred to as Model 2 and internally coded as NV91, and has been vague about subsequent plans Despite the potential slowdown in sales growth, analysts say that thanks to its transition to artificial intelligence, Tesla's future remains bright. Musk is betting on advancements in AI technology to make the establishment of a self-driving "robotaxi" fleet possible. RBC Capital Markets analyst Tom Narayan stated, "Selling cars is just a small part of it; Tesla's new revenue sources will come from semi-autonomous driving software."
Wedbush analyst Daniel Ives pointed out:
"The regulatory-friendly Trump White House helps unlock the value of Tesla's stock, as the timeline for autonomous driving may accelerate. While Trump's new policies may have some impact, this will be offset by the focus on AI innovation, which provides a very favorable boost for Tesla."