A recent analysis by RBC Capital analyst Tom Narayan suggests that concerns about Tesla’s demand may be exaggerated. Despite reports of low sales and decreasing used vehicle prices, Narayan maintains an Outperform rating on Tesla, albeit with a lowered price target from $440 to $320.
Current Market Trends
The attention surrounding Tesla has primarily focused on its delivery performance in Europe and China during January and February. However, according to Narayan, these regions represent a relatively small portion of Tesla’s overall vehicle sales. As a result, demand fears may be overstated.
Adjustments to Price Target
In addition to the potential for demand concerns, Narayan has adjusted FSD pricing assumptions and robotaxi penetration rates. The analyst anticipates that FSD pricing could decrease from $100/month to $50/month by 2026. This shift is attributed to the increasing prevalence of Level 2+ autonomy offerings as standard features, with some OEMs intentionally avoiding profit centers and instead using them as product differentiators.
Impact on Robotaxi Market Share
Tesla may also experience lower than expected market share for robotaxis in Europe and China. It is likely that domestic OEMs will dominate the market, according to Narayan. These changes contribute to a lower sum-of-the-parts valuation, with FSD decreasing from $383 billion to $211 billion and robotaxis declining from $879 billion to $641 billion.
Delivery Growth Projections
Narayan forecasts a 11% delivery growth in fiscal 2025, down from the original estimate of 14%. This adjustment raises questions about whether the lower delivery numbers are a result of “political dynamics” or planned factory shutdowns for the Model Y refresh, or possibly a combination of both factors.
Used Car Price Decline
Recent data from CarGurus highlights a sharp decline in used car prices for Tesla vehicles. Over the last three months, Tesla used prices have dropped 3.7%, and 7.3% over the last year, compared to declines of 1.1% and 2.7% respectively for the overall used car market. The used car prices for the Cybertruck and Model S have been particularly affected, falling 11.5% and 8.3% over the last three months.
Public Perception of Tesla
A recent poll revealed that 53% of respondents will never own a Tesla, while 23% are more likely to buy a Tesla, and 14% are less likely to do so. The poll also showed that 10% of respondents already own a Tesla. These results may have implications for Tesla’s sales and demand.
Current Stock Performance
Tesla stock is currently trading at $223.76, down 6% from its previous value. The stock has experienced a 41.0% decline year-to-date in 2025 and a 28.8% increase over the last year. Tesla’s stock price is now below its value when Trump won the 2024 election and has fallen over 50% from its all-time highs in December.
Conclusion
The analysis by Tom Narayan suggests that concerns about Tesla’s demand may be overstated. While the company faces challenges such as declining used car prices and lower than expected market share for robotaxis, the outlook for Tesla remains complex. As the company navigates these factors, its stock performance will likely be closely watched by investors and analysts alike.