Tesla Price Target (NASDAQ:TSLA) Raised on Tariff Relief Optimism

Sentiment in Tesla's stock (NASDAQ:TSLA) is growing more bullish after a difficult start to the year, with a 7.98% gain over the past month erasing at least part of the YTD slide (-11.52%). An upgraded price target from Mizuho Securities analyst Vijay Rakesh to $390 from $325, reiterating an Outperform rating, reflects the fading bearish sentiment that had gripped TSLA during Elon Musk's DOGE period.

The core rationale behind Mizuho's increased price target centers on the anticipated benefits from a U.S. rollback of tariffs on goods from China. Rakesh believes that this policy change will positively impact both macro demand and the import of electric vehicle parts. This is particularly relevant for Tesla, which relies on a global supply chain for its manufacturing operations.

Reduced tariff burdens could translate to lower production costs and improved profit margins, bolstering the company's financial performance. However, the analyst also tempered enthusiasm by acknowledging the challenges posed by reduced EV subsidies in the U.S., a factor that could dampen consumer demand for electric vehicles.

Analysts at Wedbush and other firms maintain Outperform ratings, with some targets reaching as high as $500. This bullish sentiment is often tied to optimism surrounding Tesla's future product pipeline, including the anticipated launch of lower-priced models in the first half of 2025 and the planned robotaxi (“Cybercab”) service in 2026.

These initiatives are expected to drive revenue growth and solidify Tesla's position in the rapidly evolving transportation landscape. The company's most recent quarterly report showed Q2 revenue of $22.5 billion and adjusted EPS of $0.40, meeting analyst estimates but reflecting a 23% year-over-year decline. The dip in free cash flow is a concern, but expectations remain high for the upcoming product launches to reverse this trend.

Earlier in 2025, Mizuho itself had adjusted its outlook on Tesla multiple times, reflecting the uncertainty surrounding the company's prospects. In March, the firm reduced its price target from $250 to $220, citing concerns about softening EV sales.

This downward revision was followed by a stock decline, driven by worries over weakening brand perception, increased competition from Chinese EV manufacturers, and geopolitical tensions. Subsequently, in April, Tesla's stock experienced another decline as analysts lowered their price targets due to concerns over tariffs, softening demand, and potential earnings downgrades.

Ultimately, Tesla's future performance will depend on its ability to navigate the challenges and capitalize on the opportunities presented by the evolving electric vehicle market. The rollback of China tariffs represents a potential tailwind, while reduced U.S. EV subsidies pose a headwind.