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Market watch: How Model 3 and other factors could impact Tesla

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Tesla has rolled into the stock market at a 1% increase today, but look for that to change as the market digests all of the news from the weekend.

One of the revelations sending ripples through the customer base is the Tesla Model 3’s tiered pricing. While it was widely known that there would be levels of pricing, many were surprised at just how high some of the options went, expecting the whole shebang to cap out around $42,000 instead of the higher tiers we see today. First photos of Tesla’s Model 3 online configurator revealed a starting price of $49,000 for first production cars and topping at nearly $60,000 for a fully optioned rear wheel drive version.

This has resulted in some customer disappointment who were hoping that the affordability of the Model 3 would be reflected throughout the tiers, and look for it to have an impact on the market as the light bulb goes off for more people.

Adding to some of the woes is news that the government incentives for the car are running out.

In previous securities filings, Tesla warned investors that changes to incentive programs “could have some impact on demand for our products and services.”

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This was seen in Hong Kong after the end of its tax break. Zero new Tesla Model S sedans and Model X SUVs were registered with the Hong Kong transport department for the month of April after the tax break was discontinued at the start of the month. Thing didn’t get much better in May, with just five electric cars registered for the whole month. In March, the last month where the tax break was still in effect, 2,939 Teslas were registered. The end of the tax break essentially slashed what was a lucrative market.

Combating the projections of some stock decreases is the fact that the Tesla Model 3 pricing is still pretty fair for the EV market. The Model 3 is one of the lowest cost EVs, while sporting one of the highest ranges on the market. By comparison, the Chevy Bolt that starts at $36,620 tops out at 238-miles of range while the premium Model 3 will have a 310-mile per charge driving range.

Also adding to the good news on the Tesla side is that those who have tried the Model 3 are pleased with it.

A Business Insider journalist who got to drive it said that “the midnight silver Model 3 I took for a spin had aerodynamic aluminum wheels and looks a lot like a smaller Model S, echoing the bigger sedan’s sloping fastback rear roofline. It’s a sharp car, and unmistakably a Tesla.”

He later followed that up with “I drove it for no time at all, but I’ve driven pretty much every other all-electric car you can buy, and I can safely say that the Model 3 has no competition.”

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Competition or not, we’ll see how all of the swirling news about the EV company will impact TSLA before the closing bell, and stay tuned to see if Tesla’s quarterly earnings report on Wednesday will add to the positives or negatives for the company.

Investor's Corner

Tesla bull writes cautious note on Robotaxi launch: ‘Keep expectations well contained’

Morgan Stanley’s Adam Jonas is more cautious about Tesla’s upcoming Robotaxi launch.

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Credit: Tesla

Tesla analyst Adam Jonas of Morgan Stanley is telling investors to be wary of the Robotaxi details CEO Elon Musk revealed this week, after a report seemed to land on the prospective launch date of the platform in June.

Earlier this week, a report from Bloomberg indicated Tesla had internally landed on a tentative date of June 12 for its Robotaxi launch in Austin. Shortly after, Musk detailed the successful testing Tesla has already performed without anyone in the driver’s seat.

Tesla lands on date for Robotaxi launch in Austin: report

He also indicated Teslas would self-deliver to customers in June.

Analysts are now sending out investor notes on the announcement Musk made, along with the Bloomberg report. Jonas’s note is more cautious than others.

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Jonas believes Tesla needs to shed more details before investors and fans of the company get too excited. He believes there is more information that could be released, but until then, he is suggesting investors “keep expectations well contained.”

He wrote:

“As is typical for highly anticipated Tesla events, we would keep expectations well contained for the (reported) June 12th Cybercab launch event in Austin. However, we would look for a continued stream of updates for the performance and growth of the network thereafter (numbers of cars, miles, trips, etc.) in the days and weeks that follow.”

The tone of Jonas’s note contradicts that of Wedbush’s Dan Ives, who believes the “golden age of autonomous” lies in Tesla’s hands. He seems to believe Tesla will come through on its June 12 launch.

Tesla set for ‘golden age of autonomous’ as Robotaxi nears, ‘dark chapter’ ends: Wedbush

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Morgan Stanley’s note is slightly more

Jonas is obviously still bullish, but is much more tentative to move forward with an attitude that communicates skepticism about what Tesla has revealed.

Jonas and Morgan Stanley have a $410 price target on Tesla shares with a ‘Buy’ rating. Tesla stock is trading at around $358 at 12:15 p.m. on the East Coast.

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Investor's Corner

Tesla analyst’s firm has sold its entire TSLA position: Here’s why

Tesla analyst Gary Black revealed his firm, The Future Fund, has sold their entire $TSLA holding.

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tesla showroom
(Credit: Tesla)

Tesla analyst Gary Black of The Future Fund revealed today that his firm has sold its entire $TSLA holding, marking the first time since 2021 that it has not had a position in the company’s stock.

Black has been a skeptic of the company and relatively pessimistic regarding some things many investors would consider catalysts, outlining his concerns and reasoning for selling the shares.

Much of Black’s reasoning concerns Tesla’s price-to-earnings ratio, delivery results and potential delivery figures for the future, and other near-term projects that he does not believe will yield as much value as others perceive.

We will break down each concern of Black’s below:

‘Disconnected from Underlying Fundamentals’

Black says that The Future Fund sold its holdings at $358 per share. The firm’s current price target is at $310, and he says it will remain there based on “our forecast of 2030 Tesla volumes of 5.4m and 2030 Adj EPS of $12.

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Main Concern is P/E Ratio

The main concern Black and The Future Fund have is that TSLA “now sells at a 2025 P/E of 188x as earnings estimates continue to fall (-5% in the past week, -40% YTD) driven by weak YTD deliveries, including weak April results.”

Black says he believes quarterly deliveries will decline by 12 percent, and full-year by 10 percent.

This compares to Wall Street’s estimates of a 7 percent decrease for Q2 and a 5 percent year-over-year.

Robotaxi Skepticism

“We believe the risk/reward associated with the Austin robotaxi test remain asymmetrical to the downside,” Black writes in his post on X.

Tesla Robotaxi deemed a total failure by media — even though it hasn’t been released

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Many believe the Robotaxi platform could be Tesla’s biggest catalyst moving forward, especially as other automakers do not seem to have even close to as robust a solution to self-driving as Tesla.

Tesla’s Affordable Models

Black says there are concerns the affordable model will be “a stripped-down Model Y priced lower and funded by lower costs rather than a new form factory that expands TAM.”

This is confusing, especially considering the cheaper price tag would expand the total addressable market (TAM) to begin with. The Model Y has been the best-selling vehicle in the world for the past two years.

Tesla still on track to release more affordable models in 1H25

Introducing an even lower-cost model with some missing features would still likely be a significantly more attractive option than a base model ICE vehicle, especially because the value Full Self-Driving provides would make the car more beneficial.

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“This increases odds that FY’25 estimates decline further, risking a repeat of 2023-2024, when TSLA reduced EV prices supported by lower costs, and TSLA saw little or no incremental volume growth,” he finishes with.

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Tesla set for ‘golden age of autonomous’ as Robotaxi nears, ‘dark chapter’ ends: Wedbush

Tesla is set to win big from the launch of the Robotaxi platform, Wedbush’s Dan Ives said.

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Tesla (NASDAQ: TSLA) is set to kick off its own “golden age of autonomous growth” as its Robotaxi platform nears launch and a “dark chapter” for the company has evidently come to a close, according to Wedbush analyst Dan Ives.

Ives has jostled his price target on Tesla shares a few times already this year, usually switching things up as the market sways and the company’s near-term outlook changes. His price target on Tesla has gone from $550 to $315 to $350 back to $500 this year, with the newest adjustment coming from a note released early on Friday.

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As CEO Elon Musk has essentially started to dwindle down his commitment to the Department of Government Efficiency (DOGE) altogether, Ives believes that Tesla’s “dark chapter” has come to a close:

“First lets address the elephant in the room…2025 started off as a dark chapter for Musk and Tesla as Elon’s role in the Trump Administration and DOGE created a life of its own which created brand damage and a black cloud over the story….but importantly those days are in the rear-view mirror as we are now seeing a recommitted Musk leading Tesla as CEO into this autonomous and robotics future ahead with his days in the White House now essentially over.”

Ives believes Tesla’s launch of Robotaxi should be the company’s way to unlock at least $1 trillion in value alone, especially as the Trump White House will fast-track the key initiatives the automaker needs to get things moving in the right direction:

“The $1 trillion of AI valuation will start to get unlocked in the Tesla story and we believe the march to a $2 trillion valuation for TSLA over the next 12 to 18 months has now begun in our view with FSD and autonomous penetration of Tesla’s installed base and the acceleration of Cybercab in the US representing the golden goose.”

There are some concerns moving forward, but none of which relate to the AI/autonomous play that Ives primarily focuses on within the Friday note. Instead, they are related to demand in both Europe and Asia, as Ives said, “there is still wood to chop to turn around Model Y growth” in both of those markets.

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Nevertheless, the big focus for Ives is evidently the launch of Robotaxi and the potential of the entire autonomous division that Tesla plans to offer as a ride-sharing service in the coming months. Ives also believes a 50 percent or more penetration of Full Self-Driving could totally transform the financial model and margins of Tesla moving ahead.

Aware of the setbacks Tesla could encounter, Ives still believes that Tesla will establish itself as “the true autonomous winner over” and that investors will recognize the AI vision the company has been so bullish on.

Ives pushed his price target to $500. Tesla shares are down just under 1% at the time of publication. They are trading at $337.88 at 11:45 on the East Coast.

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