Tesla (NASDAQ:TSLA), the iconic electric vehicle (EV) manufacturer led by Elon Musk, has faced a tumultuous 2025. With rising competition in the EV space, political controversies surrounding Musk, and a decline in European sales, Tesla stock has plummeted by 44% so far this year. However, recent tariff relief has given investors a glimmer of hope. The Trump administration granted the automotive sector a one-month delay on new tariffs, lifting investor sentiment and sparking a brief rally in Tesla stock.

This article explores whether Tesla’s stock can recover from its recent downturn and whether this tariff reprieve offers a viable opportunity to buy shares.

A Strategic Pause: The Impact of Tariff Relief

On March 5, the White House announced a one-month delay in the implementation of 25% tariffs on imports from Canada and Mexico, including parts used by automakers. Tesla, which sources over 20% of its parts from Mexico, stood to face significant cost pressures once the tariffs took effect. During the company’s Q4 earnings call, Tesla CFO Vaibhav Taneja acknowledged the challenges posed by global sourcing and the company’s efforts to localize its supply chain.

Despite this, the one-month delay provides automakers with additional time to adjust, potentially reshaping supply chains and reducing cost impacts in the long term. For Tesla, this temporary relief could allow the company to weather the financial impact and avoid immediate cost hikes.

Tesla’s Financial Performance: Mixed Signals

Despite a short-term lift from tariff relief, Tesla’s recent earnings results paint a mixed picture of the company’s overall financial health. Tesla posted its Q4 2024 earnings on January 29, showing a modest revenue increase of just 2% year-over-year to $25.7 billion, falling short of analyst expectations of $27.1 billion. Tesla’s earnings per share (EPS) of $0.73 marked a slight 3% improvement from the previous year, but still missed Wall Street’s forecast.

The company did see significant growth in some areas, particularly in energy generation and storage, where revenues surged by 113%. However, Tesla’s core automotive business, which accounts for the bulk of its revenue, saw an 8% decline in revenue from $21.6 billion to $19.8 billion. This decline was largely attributed to price cuts on Tesla’s various vehicle models, aimed at boosting sales volumes but eroding revenue.

Tesla’s Long-Term Plans: Full Self-Driving and Robotaxi

Despite its short-term struggles, Tesla is positioning itself for long-term success with its ambitious plans in Full Self-Driving (FSD) technology and autonomous vehicles. The company has declared 2025 a “seminal year,” with a focus on advancing its FSD capabilities and introducing unsupervised FSD options for customers. Additionally, Tesla’s robotaxi service is set to roll out in select U.S. regions later this year, with plans to expand its FSD offerings to Europe and China in 2025.

These initiatives are expected to play a crucial role in driving the next phase of Tesla’s growth, positioning it as a leader in autonomous driving technology and potentially creating new revenue streams.

What Analysts Say About Tesla Stock

Despite the recent boost in Tesla’s stock due to tariff relief, analysts remain cautious about the company’s prospects. As of March 2025, Tesla’s stock has a consensus “Hold” rating from Wall Street. Of the 40 analysts covering the stock, 14 have a “Strong Buy” rating, 3 offer a “Moderate Buy,” 13 give a “Hold,” and 10 maintain a “Strong Sell” rating.

The average price target for Tesla stock is $352.71, indicating a potential upside of 56% from current levels. However, the Street-high price target of $550 suggests that there is also the possibility for significant upside—up to 144%—if Tesla can execute on its growth plans in the autonomous vehicle and energy sectors.

Conclusion: Is Tesla Stock a Buy?

The recent tariff relief provides Tesla with temporary breathing room, but the company’s longer-term prospects remain uncertain. Despite its market leadership in the EV space and ambitious technological innovations, Tesla faces significant challenges, including price cuts, intensifying competition, and political volatility.

For investors, Tesla stock remains a high-risk, high-reward opportunity. While analysts are cautious overall, there is still substantial upside potential if Tesla can successfully execute its plans for Full Self-Driving and robotaxi services. However, given the uncertainties surrounding the broader market and competition, investors should weigh the risks carefully before making any decisions on Tesla stock.

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