Tesla seen as ’one of the most defensive’ car stocks amid tariffs drama

Investing.com -- Piper Sandler analysts see Tesla (NASDAQ:TSLA) as "one of the most defensive stocks" in the auto sector amid the recently announced U.S. tariffs on Canada, Mexico, and China, citing its strong U.S. production footprint.

"Tesla assembles five vehicles in the U.S., and all five rank among the most American-made cars," the analysts wrote. 

While the entire sector is expected to face supply chain disruptions, Piper Sandler believes Tesla is "better-positioned than most."

The analysts noted that the tariffs, if implemented as planned, could have severe consequences.

 "If nothing changes in the next few days, tariffs will almost certainly deal a crippling blow to automotive supply chains in North America," they wrote. However, they also acknowledged the possibility that "Trump capitulates in some way (perhaps he’ll delay implementation, in an effort to save face)."

Piper Sandler also updated its Tesla forecast following the company’s latest 10-K filing. The firm lowered its 2025 delivery outlook to 1.9 million units, a reduction of 58,000 vehicles from its prior estimate, citing extended factory downtime and weaker European demand. 

"Q1 downtime could last longer than expected; Model Y re-tooling will be disruptive," the analysts noted.

While short-term production challenges remain, Piper Sandler maintains an optimistic long-term view, reiterating its $500 price target based on 120 times estimated 2026 earnings. 

"Margin pressure may persist until re-tooling is complete and new products are launched," the analysts wrote. They also pointed to recent price cuts and promotions, which contributed to lower Q4 margins but could help demand.

Overall, while Tesla is not completely insulated from trade tensions, Piper Sandler sees it as one of the best-positioned automakers to navigate the tariff uncertainty.