However, Ives, who maintains an 'Outperform' rating on TSLA with a $550 price target, warns of risks from a possible U.S.-China trade war, noting Tesla's sales in China dropped 11.5% last month, contrasting with BYD's 47.5% increase, highlighting potential geopolitical headwinds for Tesla in this vital market.
Tesla's (TSLA) stock saw a 3% increase to $346.88 in early Thursday trading, propelled by Wedbush analyst Dan Ives' optimistic outlook. Ives, maintaining an 'Outperform' rating with a $550 price target, underscored the potential benefits of CEO Elon Musk's ties with the Trump administration, suggesting these connections could pave the way for a supportive federal autonomous vehicle policy. This regulatory shift, according to Ives, could unlock a valuation of up to $1 trillion for Tesla in the coming years due to advancements in autonomous driving technology.
Despite Musk's recent diversions, such as the Department of Government Efficiency (DOGE), Ives remains confident in Tesla's innovation trajectory. He points out that Tesla's immediate plans, including the introduction of unsupervised self-driving tests, the launch of a budget-friendly car model, and expansion in robotics, are poised to counterbalance any distractions. Musk's ability to juggle multiple high-profile projects is seen as a strength rather than a liability, with Tesla's tech development machine gaining momentum towards an autonomous and robotics-enhanced future.
However, the analyst did highlight a significant risk factor - the potential for a trade war between the U.S. and China. Tesla's performance in China, the world's largest electric vehicle market, has been faltering, with sales dropping by 11.5% to 63,238 units last month compared to a 47.5% increase for local competitor BYD, which sold 296,446 units. This downturn comes at a time when Tesla is already facing stiff competition in China, and any retaliatory policies from Beijing could exacerbate Tesla's challenges in this critical market. Ives warns that an escalated trade conflict could introduce geopolitical risks that might dampen Tesla's growth prospects in China.
Ives' analysis suggests a nuanced picture for Tesla investors: while the company is on track for significant technological and market expansion, particularly in autonomous vehicles, external geopolitical factors could pose threats. This balance of optimism about Tesla's technological roadmap with caution regarding international trade relations underscores the complex environment in which Tesla operates, balancing innovation against global market dynamics.