Tesla stock rose by roughly 17% over the past week, despite slipping nearly 5% in Wednesday’s session. Several developments have influenced Tesla’s stock in recent weeks. So, what’s been fueling the recent movement?
Could Auto Import Tariffs Benefit Tesla?
President Donald Trump announced on Wednesday a 25% tariff on vehicle imports to the U.S., aiming to promote domestic production. Tesla might emerge as a beneficiary—or at least be less affected—since it manufactures all its U.S.-sold vehicles at its California and Texas plants, exempting them from tariffs. In contrast, rivals like GM and Ford produce EVs in Mexico and may face steeper cost increases. This could make Tesla vehicles more price-competitive and help it grow market share. However, Tesla isn’t completely insulated, as it may incur higher costs from more expensive imported parts.
Musk Reinvests Focus on Tesla
Elon Musk’s prominent role in the new Department of Government Efficiency under the Trump administration has drawn criticism and sparked concerns about his attention to Tesla. However, recent developments suggest he’s turning his focus back to the company. During an all-hands meeting last week, Musk reassured staff about Tesla’s direction and encouraged them to retain their shares, underlining the company’s ambitious future. This renewed engagement may have contributed to the stock’s recent gains.
Challenges in Europe
Tesla has seen its European sales drop significantly. According to the European Automobile Manufacturers’ Association, new Tesla vehicle registrations declined 40% year-over-year in February. This contrasts with the broader EV market, which posted a 26% increase. Multiple reasons may explain the drop: customers may be delaying purchases ahead of the updated Model Y, Europe’s top-selling EV. Additionally, Musk’s political involvement and ties to Trump—who has had strained relations with Europe—might be distancing Tesla from its more progressive European customer base.
Tesla Stock’s Track Record of Volatility
TSLA stock’s performance over the past four years has been marked by significant volatility compared to the S&P 500. The stock returned 50% in 2021, dropped 65% in 2022, surged 102% in 2023, and climbed 63% in 2024. The Trefis High Quality Portfolio, which includes 30 stocks, has experienced much lower volatility and has consistently outperformed the S&P 500 over the same period.
What explains this outperformance? HQ Portfolio stocks, as a group, have delivered stronger returns with lower risk compared to the benchmark index, offering a smoother ride as reflected in the HQ Portfolio performance metrics. With ongoing uncertainty in macroeconomic conditions, including rate cut speculation and global conflicts, TSLA may once again underperform the S&P as it did in 2022—or could potentially post strong gains.
We estimate Tesla’s fair value at around $250 per share—roughly 10% below its current market price of $270. We remain cautious for a few reasons. In 2024, Tesla’s vehicle deliveries declined year-over-year for the first time in over ten years. The EV space is becoming more competitive, with Chinese manufacturers gaining global traction. Tesla’s brand is also taking a hit, with resale values dropping and its early-adopter market showing signs of saturation. After the recent stock rally, Tesla’s valuation appears stretched, trading at 100x expected 2025 earnings—a level that could take time to justify. For a deeper look at valuation, see our breakdown on Tesla Valuation: Is TSLA Stock Expensive Or Cheap?. You can also explore our dashboard on Tesla Revenue: How Does TSLA Make Money?
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