Investors think the worst could be over for Tesla , judging by the stock’s post-earnings rally. Deutsche Bank has a few reasons that may explain why this is happening. Analyst Edison Yu reiterated his buy rating and $345 price target on Tesla shares, suggesting the stock could gain about 45% from Tuesday’s close. The stock is down 39% in 2025, after suffering its worst quarterly drop since 2022 in the first quarter. “After a very volatile start to the year, we think the set up for the stock going forward should improve as deliveries and sentiment could potentially be bottoming together,” Yu wrote in a Wednesday note to clients. “1Q earnings were generally better than feared. … While the volume outlook in 2025 is clearly soft, we think expectations are already quite low.” Tesla shares jumped 8% on Wednesday, even after the company’s results missed on the top and bottom lines . The electric vehicle maker’s total revenue and automotive revenue slid 9% and 20%, respectively, from a year earlier. Net income plunged 71%. Tesla refrained from promising growth this year and said it will “revisit our 2025 guidance in our Q2 update.” Yu sees upside from here on out, however. Here’s why: 1) Elon Musk returning focus back on Tesla One boon for the stock, according to Yu, is Tesla CEO Elon Musk ‘s comments on Tuesday that he will begin stepping back from his involvement with the Department of Government Efficiency, an effort he is overseeing to downsize the federal government. Musk has spent much of his time in recent months supporting the Trump administration. “I think starting probably in next month, May, my time allocation to DOGE will drop significantly,” Musk said during Tesla’s earnings call. “I think I’ll continue to spend a day or two per week on government matters for as long as the President would like me to do so and as long as it is useful, but starting next month, I’ll be allocating far more of my time to Tesla.” 2) Plans to launch an affordable model Tesla’s launch of a cheaper model is still expected to happen in the first half of this year, Yu said, adding that he expects a staggered rollout starting in the U.S., followed by Europe and then China. Yu expects this will be a slower ramp than expected, so he lowered his deliveries estimate by 50,000 to 1.65 million vehicles, or a decline of 8% year over year. Auto margins in the second half of the year could be weaker due to ongoing tariff uncertainties, he said. 3) Robotaxi plans remain on track Tesla doubled down on its plan to launch a robotaxi service in Austin, Texas, in June, with the Model Y being the primary driverless taxi that will use Tesla’s unsupervised Full Self-Driving software. Yu expects the service will launch with 10 to 20 vehicles and then ramp up significantly by the year’s end, while expanding to other U.S. locations. “Elon Musk expressed confidence that the monetary contribution from autonomy should be material by 2H26 which seems somewhat aggressive to us. Management also commented that in the future, a localized parameter set for certain regions will be used for areas with harsher weather,” Yu said. “There were no numerical updates on miles between critical interventions though. Nevertheless, it seems management is confident in achieving the necessary threshold by June.” Tesla remains a laggard in the robotaxi market, which is currently led in the U.S. by Alphabet’s Waymo. Tesla is also facing competitive headwinds from lower-cost vehicles in China. 4) Model Y Juniper ramp-up Yu said he expects Tesla’s second-quarter volume to “demonstrate improvement” as the Model Y Juniper fully scales globally. The refreshed model was released in the U.S. in January. Tesla plans to make a lower-cost version of its best-selling Model Y in Shanghai, with mass production set to begin in 2026, according to a Reuters report . The company has faced competition from lower-cost vehicles in China, its second-largest market. TSLA 1Y mountain Tesla stock performance. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
