Tesla stock price today: TSLA stock slides on new probe, downgrade

Tesla stock price today, Tesla (TSLA) stock is retreating 4% today after the federal government announced a new probe of the firm.

Additionally, Bank of America downgraded the shares from Buy to Neutral today. The National Highway Traffic Safety Administration (NHTSA), which is already conducting several investigations into Tesla, announced today that it has launched a new inquiry into Elon Musk's automaker.

25 Most In-Demand Cars Heading into 2024

The National Highway Traffic Safety Administration (NHTSA) is set to investigate Tesla's Actually Smart Summon system. The agency received four reports of accidents that occurred while Tesla vehicles were operating in this mode. According to the NHTSA, the system allows users to remotely move their vehicle to their location or another designated spot using a smartphone app. However, during the reported accidents, Tesla's EVs failed to detect obstacles such as posts or parked cars, leading to collisions.

Bank of America's Downgrade effected the TSLA stock

Tesla stock news today: Bank of America has noted that Tesla's upcoming positive catalysts are now more widely recognized than before. The bank stated that current TSLA stock levels reflect much of the company's long-term potential across core automotive sales, robotaxi services, the Optimus project, and energy generation and storage.

They set a price target of $490 for TSLA shares. While acknowledging Tesla's potential, Bank of America believes that some AI stocks present greater opportunities for higher returns in a shorter timeframe. For those interested in a promising AI stock trading at less than five times its earnings, the bank recommends reviewing their report on the most affordable AI stocks.

Tesla Shares Decline as Company Reports First Annual Delivery Drop

Tesla's shares fell after the automaker announced its first decline in annual deliveries on Thursday. The company delivered fewer electric vehicles than anticipated in the fourth quarter, and incentives failed to stimulate demand for its aging model lineup. Throughout 2024, Tesla struggled to meet its quarterly delivery targets.

For the year, Tesla reported deliveries of 1.79 million vehicles, marking a 1.1% decrease compared to the previous year and falling short of the estimated 1.806 million units according to a poll of 19 analysts by LSEG. In the fourth quarter alone, Tesla delivered 495,570 vehicles, missing projections of 503,269 units from 15 analysts. This included 471,930 units of the Model 3 and Model Y, along with 23,640 vehicles from other models, such as the Model S sedan, Cybertruck, and Model X premium SUV. During the October to December period, the company produced 459,445 vehicles.

Shares of Tesla dropped 3.5% ahead of the market opening, reflecting investor concerns about the challenges facing CEO Elon Musk. He anticipated that promotions, including zero-interest financing, would drive "slight growth" in deliveries for 2024. Despite this downturn, Tesla's stock has increased by more than 60% over the past year, buoyed by developments following the US presidential election, which has significantly increased Musk's net worth to over $400 billion.

Tesla Shares Drop Amid Challenges, But Long-Term Optimism Persists

Tesla faces pressure from reduced European subsidies, a US market shift toward more affordable hybrid vehicles, and intensified competition from China’s leading EV manufacturer, BYD. The company reported a series of disappointing quarterly earnings throughout 2024, with price cuts and the introduction of a new truck failing to attract customers.

Despite these challenges, investor sentiment remains optimistic due to Musk's close ties with President-elect Donald Trump. However, some Tesla owners have expressed regret over their purchases following Musk's hard-right political stance, feeling embarrassed to drive the vehicles. Musk has also hinted at stepping back from the company amid a prolonged legal dispute over his compensation, with a judge rejecting his $56 billion pay package twice as excessive, despite shareholder approval.

In response to sales challenges, Musk has shifted Tesla's focus towards self-driving taxis and made substantial campaign contributions to Trump, hoping to secure regulatory relief. He donated nearly $250 million to support Trump’s campaign.

With self-driving technology still years away from realization, analysts suggest that Tesla will need to leverage cheaper versions of its current models and the Cybertruck to drive short-term sales growth. However, signs of demand weakness for the Cybertruck have been noted.

Additionally, October registrations for Tesla vehicles in Europe fell by 24%, largely due to strong competition from the Volkswagen Group, whose Skoda Enyaq SUV surpassed the Model Y as the region's best-selling EV, according to data from Jato Dynamics.

In an effort to remain competitive, Tesla reduced the prices of several models last year, which impacted its profit margins. Nevertheless, Wall Street anticipates a rebound in demand in 2025 as the US Federal Reserve is expected to lower interest rates.

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