Key Morningstar Metrics for Tesla
- Fair Value Estimate: USD 250
- Morningstar Rating: ★★★
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: Very High
What We Thought of Tesla’s Earnings
Tesla’s TSLA first quarter saw lower revenue and profits, following the previously announced 13% deliveries decline. However, the affordable vehicle production and robotaxi testing both remain on track for the year. CEO Elon Musk will also spend less time advising the US government to focus on Tesla.
Why it matters: Tesla saw 2024 deliveries decline and we think its current auto lineup is near market saturation. We think Tesla needs to launch the more affordable vehicle for deliveries to grow. This should allow it to see improved deliveries throughout 2025 and growth in 2026.
- The robotaxi testing is a key milestone for Tesla’s goal to eventually offer a robotaxi service. Management said it aims to begin offering the service in select markets in 2026, which would add another revenue and profit stream for Tesla.
- Since US President Donald Trump took office in January, Tesla CEO Elon Musk has been an advisor. We think the market was concerned Musk could be distracted from leading Tesla and potentially hurt Tesla’s brand. Musk’s decision to reduce his advisory role should alleviate these concerns.
The bottom line: We maintain our $250 per share fair value estimate for narrow-moat Tesla. We view shares as fairly valued, with the stock trading around our fair value estimate. We reduce our near-term profit forecast due to tariffs. Separately, we increase our autonomous driving software adoption forecast.
- With the affordable vehicle production schedule unchanged, our outlook for the cadence of 2025 deliveries is unchanged. We see deliveries improving sequentially in the second quarter, then returning to growth in the second half of the year as the more affordable vehicle enters production.
- We see a moderate tariff impact on Tesla. Tesla said around 85% of its auto content is United States-Mexico-Canada Agreement-compliant, which should greatly reduce the tariff effect on the auto business. However, the battery business imports cells from China, which will weigh on profits.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.