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Wall Street banks expect sales of Tesla vehicles to grow much more slowly this year than co-founder Elon Musk had forecast, as Donald Trump seeks to roll back Biden-era climate policies favoring electric vehicles.
Tesla is poised to sell 2.07 million vehicles this year, up 16 percent from 2024, according to analyst forecasts compiled by FactSet. That would be a recovery from last year, when the group reported its first decline since 2011but it is well below Musk’s projection of 20 to 30 percent in October and below the annual growth rate of about 40 percent over the previous two years.
The figures underscore the challenge Tesla faces as a result of Trump’s promise to roll back policies that have boosted sales of electric vehicles in the US. Last week, an executive order said the White House would consider “eliminating unfair government-imposed subsidies and other ill-conceived market distortions.”
“Trump 2.0 opposition to EV incentives has topped 2025 volume expectations,” said Morgan Stanley analyst Adam Jonas.
Tesla, which reports fourth-quarter earnings on Wednesday, would be particularly hard hit if Trump were to end a $7,500 tax credit for electric vehicle buyers. Barclays analyst Dan Levy estimates that about two-thirds of Tesla’s US sales benefit from the loan.
Changes to subsidies for electric vehicles are likely to come into force from 2026; some analysts say Tesla’s sales numbers could be boosted by buyers rushing to close the sale early. Levy predicted “significant pre-sales of electric vehicles” in the second half of 2025 before volumes fall next year; other analysts believed that advance purchases were already boosting Tesla’s sales.
Some analysts questioned how much the upfront purchase would be; BNP Paribas Exane estimates that volume growth this year could amount to only 12 percent.
Investors in Tesla are also concerned about broader “pressures on the electric vehicle market, Chinese competition [and] slowing Cybertruck volumes,” Jonas said.
Overall growth in electric vehicle sales in the US slowed last year due to high prices and a lack of new models; the market share of electric vehicles was 8 percent, compared to 7.6 percent in 2023.
Meanwhile, Trump’s trade policy toward China could exacerbate tensions with Tesla’s second-largest market.
Musk’s vocal support for Trump and interventions in British, Italian and German politics may also have turned off some potential buyers. Tesla’s electric vehicle sales in the EU will fall 13 percent year-on-year in 2024, according to Acea, the European automotive industry body.
Ginny Buckley, founder of Electrifying.com, an electric vehicle buying advice site, said: “Tesla was the market leader, and still is in many ways, but people are turning away.”
Tesla’s aging portfolio is another cause for investor concern. The only new model to drop from the 2020 Model Y SUV is the Cybertruck, which starts at $82,000 and sells between 9,000 and 12,000 units of quarters.
This year, Tesla is revamping the Model Y, but last year it scrapped plans for a new $25,000 vehicle, publicly dubbed the Model 2 and internally known as the NV91. Musk has been tight-lipped about plans for a successor to the NV91, leading some analysts to speculate that he could announce a “Model 2.5” this year.
The company hinted to investors that the new model could arrive in the second half of this year; many expect additional details could emerge this week.
Musk previously predicted that Tesla’s total sales could exceed 20 million a year in the future. But even with the new affordable offering, Tom Narayan, an analyst at RBC Capital Markets, said that was unlikely. He expects that Tesla could eventually achieve annual sales of no more than 6 million.
Despite the risk of slowing sales growth, analysts say Tesla’s future looks bright — thanks to its pivot to artificial intelligence. Musk is gambling that advances in artificial intelligence technology have made construction possible fleet of autonomous “robotaxis”.
“Selling cars is a small part of it,” Narayan said, adding that Tesla’s new source of revenue will come from software for semi-autonomous driving.
Tesla is also building a humanoid robot that Musk has said will be “the biggest product ever of any kind” and should propel the company to a $25 trillion valuation, up from a market capitalization of $1.3 trillion today.
Trump’s ‘regulatory-friendly’ White House helps unlock Tesla’s stock value as autonomous [car] the timeline is probably accelerated,” Wedbush analyst Daniel Ives said.
“There will be an anti-EV focus around emissions standards and the removal of the $7,500 tax credit,” but that will be balanced by “a focus on artificial intelligence innovation, which provides very favorable tailwinds,” he said.
