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Investing.com -- Baird reiterated its near-term bearish and long-term positive outlook on Tesla (NASDAQ:TSLA) shares, citing insights from a visit to the company’s battery manufacturing line at the Texas gigafactory and discussions with the investor relations (IR) team.
The investment bank lowered its delivery estimates for the first and second quarters of 2025, highlighting near-term headwinds in the form of production downtime and the subsequent re-ramping process for the Model Y Launch series.
The retooling of the Model Y, Tesla’s best-selling model, has been a significant undertaking, with production halted simultaneously at all four factories to accommodate the new series.
Deliveries of the refreshed Model Y began in China in mid-February, followed by Europe, and started in the U.S. less than two weeks ago. “We believe this will cause deliveries to be lower than our previous estimate given that Tesla ended 2024 with 12 days of inventory,” Baird analyst Ben Kallo said.
The re-ramping process is expected to affect second-quarter deliveries as well, driving the deliveries estimates adjustment at Baird.
Kallo also noted the challenge in distinguishing between supply and demand factors affecting first-quarter deliveries reported by third-party sources.
“Regardless of the root cause, we believe fears regarding Musk’s impact on the Tesla brand happening alongside the re-ramp of Model Y production will fuel bear arguments regarding demand which creates a near-term overhang,” he wrote.
On a more positive note, the analyst highlighted Tesla’s “impressive manufacturing capabilities,” including the 4680 cell production process, which is slated for use in the Model Y later this year.
Moreover, Tesla plans to launch a robotaxi service and a more affordable vehicle model, priced near $30,000 including the Inflation Reduction Act (IRA) credit, in June starting in Austin.
Looking beyond the near-term focus, Baird identified several potential catalysts for Tesla through the end of 2025.
These include the launch of a more affordable vehicle and robotaxi service in June, another new model in late 2025, and the production of Optimus robots for internal use, targeting 10,000 units in 2025.
“In the long term, we view TSLA as a core holding and are positive on its AI strategy/ capabilities, Optimus/robotics, Dojo compute, manufacturing leadership, and the Energy business among others,” Kallo concluded.