Tesla (TSLA, Financials) shares declined 6% to $225.14 in pre-market trading Monday as analysts pointed to weak first-quarter deliveries, potential fallout from U.S. tariffs, and brand deterioration linked to CEO Elon Musk's political associations.
The pre-market decline follows a 10.4% drop in regular trading on Friday. Tesla reported deliveries of 337,000 vehicles for the first quarter, down 13% from a year earlier and about 40,000 below Wall Street estimates.
Wedbush Securities lowered its price target on Tesla from $550 to $315. Analyst Dan Ives said the company is facing a “brand crisis tornado,” fueled by Musk's political activity and the renewed pressure of tariffs imposed by U.S. President Donald Trump. The tariffs, which average 25%, are expected to raise costs and disrupt Tesla's global supply chain, which has long been a strategic advantage.
Ives estimated Tesla has lost about 10% of its future global customer base due to weakening brand sentiment. He also warned of rising challenges in China, where consumer backlash could drive buyers to domestic rivals such as BYD, Nio, Li Auto, and XPeng.
Michael Dunne, chief executive of Dunne Insights, said the tariff scenario strengthens the competitive position of Chinese electric vehicle makers. He highlighted BYD's cost advantage and suggested the company could offer a $30,000 vehicle in the U.S. priced 20% below Detroit competitors.
Tesla shares have declined more than 40% year to date. Other Chinese EV stocks have also moved sharply in 2025. Nio (NIO, Financials) closed at $3.26 after falling 5.8% as of April 7. Li Auto (LI, Financials) closed at $23.07 after falling 6.9% on April 4. XPeng (XPEV, Financials) ended April 7 at $19.43. BYD declined 10% to 321.76 yuan ($44.43) on the same day.
Analysts warn that Tesla's exposure to political and trade tensions may continue to weigh on demand and strengthen the market position of Chinese automakers.
