Tesla downgraded as 'uncertainty abounds'

Investing.com -- Baird analysts have downgraded Tesla (NASDAQ: TSLA) to Neutral, citing "uncertainty abounds" around the company’s near-term outlook.

Despite a strong recent performance, which saw TSLA shares climb 24% following a "fundamentally poor quarter," Baird believes "lofty expectations" for the June launch of a more affordable vehicle and robotaxi service are already priced into shares.

Baird highlighted several reasons for the downgrade, including "lofty expectations, key-man risk, and increasing competition."

The analysts specifically pointed to CEO Elon Musk’s relationship with President Donald Trump, stating that it "now adds uncertainty and fuels questions regarding brand damage."

They see Musk’s political activities as exemplifying "key-person risk associated with Musk’s political activities." Baird expects these brand concerns to "persist until sustained evidence of volume growth avails itself."

Regarding the much-anticipated robotaxi service, Baird noted that "Robotaxi expectations are high, and competition is intensifying."

While Musk has projected "hundreds of thousands of vehicles on the road by 2H next year," Baird’s model forecasts only 6,000.

They believe the robotaxi business will be "harder (and likely less profitable) than the lofty expectations held by several investors."

Baird has also lowered its 2026 delivery estimates for Tesla, reflecting the removal of the EV tax credit. Their updated estimates for Q2 2025 deliveries are 377,000, below the consensus of 404,800. For the full year 2025, they project 1.72 million deliveries (versus consensus 1.70 million), and for 2026, 2.19 million (versus consensus 2.06 million).

Despite these near-term concerns, Baird maintains its long-term view of Tesla as a "core holding." They see an "outsized opportunity related to both robotaxi and robotics" in the longer run, but are "stepping to the sidelines for now."

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