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Tesla (TSLA) shares have been hit by CEO Elon Musk's involvement with the Trump administration. But it's not just public relations concerns that have led to the stock's decline. As BofA Securities senior automotive analyst John Murphy explains, there is a "massive change" that has also been impacting the business. Find out what it is in the video above.
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Lastly, gotta ask you about Tesla, which, as your research showed, what we showed earlier, doesn't really have a large tariff exposure, even though, yes, it imports some parts, but but its cars are that it sells in the US are made in the US. But it's got other issues, shall we say. So I'm curious what your current thinking is on that, especially ahead of um getting some some delivery numbers from Tesla um and how long you think maybe some of the sales issues there are going to persist?
So it's it's a great question. Uh this is a company where sentiment matters almost as much as the fundamentals, but fundamentals always matter. And I think what you look at with Tesla is they're going through a massive change over to their Model Y, both here in the US, Europe, uh and China. So there's some real disruption uh that's going on. As are going through a major product change over, that's about two-thirds of their volumes globally roughly. Uh so that's been very uh very disruptive to their ability to get vehicles to consumers and sell them. Uh so you have to remember that that's going on at the same time as an entry-level model, which is supposed to be launched in the first half of the year. We have no specifics or details on yet, so it's unlikely to be launched uh by by June. Um that product cycle, um change over in the product cycle of new products coming is all important to driving new vehicle sales. And I think if you think about this company as a software and AI company over time, you still need to get the hardware out there to put that software and AI on in the real world. So these product cycles are going to be very important. So I think that's a a fundamental challenge for the company here in the short run. The sentiment side is sentiment's pretty bad um towards the brands. Um and obviously, there's a lot of political cross currents that are going on here uh that people I think are conflating a little bit too much with damage to the brand or pressure on the brand. But um there's a lot going on here. Sentiment is incredibly negative, and that's often when the stock bottoms out. So we're going to have to keep a close eye. We're currently neutral, um but you know, it's going to be a messy first quarter for them because of that change over and some of the sentiment going on. But there's going to be opportunity over time for this to be uh, you know, probably a pretty solid company over time.