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Wall Street banks expect Tesla’s vehicle sales to grow much slower this year than boss Elon Musk forecast, as Donald Trump seeks to dismantle Biden-era climate policies that favor electric vehicles.
Tesla is poised to sell 2.07 million vehicles this year, up 16 percent from 2024, according to analyst forecasts compiled by FactSet. That would be a rebound from last year, when the group reported its first decline Since 2011but it is well below the 20 to 30 percent musk projected in October and the previous two years, down from about 40 percent.
The numbers underscore the challenge Tesla faces from Trump’s promise to roll back policies that have boosted U.S. EV sales. Last week, an executive order said the White House would consider “eliminating unfair subsidies and other ill-conceived government-imposed market distortions.”
“Trump 2.0 opposition to EV incentives has reached volume expectations in 2025,” said Morgan Stanley analyst Adam Jonas.
Tesla, which reports its fourth quarter on Wednesday, would be hit particularly hard if Trump scraps a $7,500 tax credit for EV buyers. Barclays analyst Dan Levy estimated that about two-thirds of Tesla’s U.S. sales benefit from the credits.
The changes to EV subsidies are expected to take effect from 2026. Some analysts said Tesla’s sales could be boosted by buyers rushing ahead of sales. Levy predicted “significant EV pre-buy” in the second half of 2025 before volumes decline the following year. Other analysts believed that pre-buys were already boosting Tesla’s sales.
Some analysts asked how big the upfront buyer would be. BNP Paribas Exane estimates volume growth this year could be up to 12 percent.
Tesla investors are also concerned about broader “pressures in the EV market, Chinese competition (and) slowing Cybertruck volumes,” Jonas said.
Overall U.S. EV sales growth slowed last year due to high prices and a lack of new models. The EV market share was 8 percent, compared to 7.6 percent in 2023.
Meanwhile, Trump’s trade policies toward China could exacerbate tensions with Tesla’s second-largest market.
Musk’s vocal support of Trump and interventions in British, Italian and German politics may also have turned off some potential customers. According to ACEA, the European automotive industry, Tesla’s EU sales of EVs fell 13 percent in 2024.
Ginny Buckley, founder of Electrificing.com, an EV buying advice site, said: “Tesla was a market leader and in many ways still is, but people are being turned off.”
Tesla’s aging portfolio is another investor concern. The only new model it has released since the Model Y Sport Utility Vehicle in 2020 is the CyberTruck, which starts and sells at $82,000 between 9,000 and 12,000 Units a quarter.
This year Tesla is redesigning the Model Y, but last year it announced plans for a new $25,000 vehicle, publicly called the Model 2 and referred to internally as the NV91. Musk has been vague about plans for an NV91 successor, leading some analysts to believe he could announce a “Model 2.5” this year.
The company has indicated to investors that the new model may take place in the second half of this year. Many expect more details to emerge this week.
Musk has previously predicted that Tesla’s total sales will top 20 million per year in the future. But even with a new affordable offering, RBC Capital Markets analyst Tom Narayan said that’s unlikely. He expects Tesla could eventually reach $6 million in annual sales.
Despite the risk of sputtering sales growth, analysts said Tesla’s future looks bright – thanks to its pivot into artificial intelligence. Musk plays that advances in AI technology have made it possible to build a Fleet of autonomous “robotaxis”.
“Selling cars is a small piece of it,” Narayan said, adding that Tesla’s new revenue stream will come from semi-autonomous driving software.
Tesla is also building a humanoid robot that Musk has said will be the “biggest product of all kind” and should take the company from its current market cap of 1.3 TN to a valuation of $25.
“A ‘regulatory-friendly’ Trump White House helps drive Tesla’s value as autonomous (CAR) adoption likely accelerates,” said Wedbush analyst Daniel Ives.
“There will be an anti-EV focus on emissions standards and the removal of $7,500 tax credits,” but this will be offset by a “focus on AI innovation that provides very favorable tailwinds,” he said.
