3. Tesla Inc (NASDAQ:TSLA)
Number of Hedge Fund Investors: 99
Steve Westly, The Westly Group founder & managing partner, said in a recent program on CNBC that Tesla Inc (NASDAQ:TSLA) Q1 delivery data showed a “stark” contrast to the broader industry, where EV sales are growing. The analyst believes the Elon Musk-led company needs a growth catalyst soon:
“You can’t go on forever without showing growth in profits, and look, this is a rough quarter for Tesla, and they may not have hit rock bottom yet. Big miss on deliveries—337,000 vehicles versus an estimate of 380,000. That’s a 13% decrease, and it stands in stark contrast to the rest of the world. EVs grew 29% year-over-year, Tesla’s shrank 13%. So that’s why the share price has dropped 50% from a December high of 1.5 trillion, down now to just over 700 billion. It’s hard to lose $800 billion in shareholder value without investors getting a little worried. Now analysts expect a flat Q1, revenues probably 21.5 billion. That could be lower revenues for 2025, and if you want to be valued as a flashy high-tech company, you need the growth to go with it. Punch line: Tesla needs to find a new growth engine soon.”
Tesla’s EV sales are falling all over the world as the company faces challenges from competitors. Even if Elon Musk increases his focus to fix the company’s problems, it would take a lot of effort to come out of the demand crisis. For example, in California, the largest U.S. market for electric vehicle adoption and sales, Tesla sales fell about 12% year over year in 2024, causing its market share to drop from 60.1% in 2023 to 52.5% in 2024. Was it because Californians are buying fewer EVs? No. Californians purchased more than 2 million electric cars during the year, almost double when compared to the past two years.
Things aren’t looking good for Tesla in Europe, either. For example, in Germany, Tesla delivered just 1,429 new cars in February, down 76% from the same month last year. In contrast, battery-electric vehicle (BEV) registrations surged 30.8% during the month.
Tesla Inc’s (NASDAQ:TSLA) product lineup is showing signs of stagnation, with over 95% of sales still coming from the Model 3 and Model Y. Meanwhile, competitors are rolling out more advanced models. According to Reuters, Tesla’s market share in Europe is slipping as legacy automakers like BMW post stronger sales. Chinese competitor BYD is also gaining ground in Europe, despite talk of tariffs.
ClearBridge Large Cap Growth Strategy stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q1 2025 investor letter:
“Our active underweight to the Magnificent Seven added more than 100 basis points to relative returns for the quarter, with underweights to EV maker Tesla, Inc. (NASDAQ:TSLA) and Google parent Alphabet being among the largest relative contributors. We added to both positions, taking advantage of what we view as short-term weakness as Alphabet missed high expectations for cloud revenue growth in its latest quarter, while Tesla worked through negative sentiment over CEO Elon Musk’s role in the Trump administration.”
