Tesla is expected to perform strongly in 2025, primarily driven by rapid developments in artificial intelligence, autonomous vehicles, and robotaxi services. Although the current valuation is high, the long-term outlook remains optimistic, despite potential volatility along the way.

Key Growth Drivers

1、Favorable Policies and Leadership: The optimistic forecast for 2025 largely hinges on potential policy benefits from the new Trump administration. It is anticipated that the new government will create a more relaxed regulatory environment, particularly in the tech sector, which will reduce constraints on innovation, especially in autonomous driving and AI. Wedbush analyst Dan Ives predicts that Tesla’s market cap could reach $2 trillion, with autonomous driving and AI contributing approximately $1 trillion. He believes the Trump administration may eliminate regulatory hurdles, accelerating Tesla’s significant advancements in these fields.

2、Launch of Affordable Electric Vehicles: There is considerable market anticipation for Tesla’s upcoming low-cost electric vehicle, which is seen as a key growth driver. Tesla has confirmed that it will launch a model priced below $30,000 in the first half of 2025, close to the previously discussed $25,000 price point. If Tesla can successfully launch this model amid inflationary pressures and rising manufacturing costs while achieving positive gross margins, it would be a significant achievement, further solidifying its leadership in the electric vehicle market.

3、Potential in the Mobility as a Service (MaaS) Market: Another important catalyst for a positive outlook on Tesla is its potential in the MaaS industry, which is expected to reach a market size of $50 billion by 2032, providing significant incremental revenue growth for Tesla. Although analysts have modest growth expectations for Tesla in the fiscal year 2024, predicting only 3% year-over-year revenue growth, they expect a jump to 16.5% growth in fiscal year 2025. This growth might merely be the starting point for a larger upward trajectory, with significant acceleration expected from fiscal year 2026 onward.

（Source: uSMART）

Valuation Considerations

Despite Tesla’s stock having risen over 85% in 2024, its price-to-earnings ratio of 186 introduces investment risks. Tesla's high valuation is not solely based on fundamentals but is supported by various factors, including Elon Musk's global influence, Tesla's leading position in the electric vehicle market, and its strong performance in the $50 billion robotaxi market.

Investment Sentiment

According to TipRanks data, Wall Street analysts rate Tesla as a "hold" overall. Among them, 13 analysts are bullish, 12 are neutral, and 9 are bearish. The average target price is $287.10, suggesting a potential decline of 34.8%. This situation reflects market uncertainty regarding Tesla’s future, and investors should remain cautious when weighing potential returns against risks.

Conclusion

While bearish sentiments about Tesla’s valuation and growth prospects exist, the positive factors for Tesla in 2025 seem to outweigh the negatives. With a favorable policy environment and continued advancements in AI and autonomous driving technologies, Tesla is likely to maintain strong growth momentum and competitive market standing in the long term. Although investors may face significant volatility during this journey, Tesla’s innovative capabilities and market leadership make its future prospects worthy of attention.

How to Trade on uSMART

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（Source: uSMART HK）