Jefferies raised its price target on Tesla (NASDAQ:TSLA) to $350 from $300 while maintaining a Hold rating, citing stronger medium-term growth expectations despite ongoing concerns around execution.
The firm noted that first-quarter results were expected to further highlight a widening gap between Tesla’s long-term vision and near-term execution. Absent a meaningful update on robotaxi deployment, analysts suggested investor concerns around funding could intensify, potentially raising questions about a future merger with SpaceX.
Jefferies pointed to elevated capital expenditure plans, which were expected to create near-term loss centers, prompting reductions to its 2026–2027 estimates. For the first quarter, the firm projected revenue of $21.2 billion, representing 10% year-over-year growth but a 15% decline sequentially, based on deliveries of approximately 358,000 vehicles, including weaker performance from the discontinued Model S and X.
Core unit revenue was estimated at roughly $41,000, assuming continued expansion into new markets alongside increased adoption of Full Self-Driving (FSD), partially offsetting pricing pressures and product de-contenting. Core automotive gross margin was forecast at 15.5%, down from 17.2% in the prior quarter, reflecting lower volumes and a roughly 200-basis-point depreciation headwind.
Operating margin was expected to fall below 3%, translating to approximately $609 million in operating profit, with EPS projected at $0.14 on a GAAP basis and $0.27 non-GAAP. With production exceeding deliveries by around 50,000 units, the firm estimated a $1.5 billion inventory impact. Combined with early-stage cybercab investments and initial spending under Tesla’s $20 billion annual capex plan, cash burn was projected at approximately $1.9 billion.
Looking ahead, Jefferies highlighted several medium-term dynamics. Tesla was seen as cautiously reinvesting in its vehicle lineup, including a potential lower-priced model to support volumes, while focusing on affordability, commoditization, FSD subscriptions, and integration with Grok AI. Energy storage weakness in Q1 was viewed as temporary, with the segment expected to remain a key cash flow contributor.
The firm also expressed skepticism around Tesla’s ambition to deploy robotaxis across 25%–50% of U.S. markets by year-end, citing regulatory and technological hurdles. While humanoid robotics were viewed as a longer-term opportunity, Tesla’s vertically integrated model and scaling capabilities were seen as competitive advantages.
For full-year forecasts, Jefferies reduced expected volumes by 3% to 1.7 million units, including 50,000 lower-cost vehicles and 25,000 cybercabs, many of which would be capitalized. The firm projected total revenue of $102 billion, core automotive gross margin of 15%, EBIT margin of 5.8%, and cash burn of $4.9 billion, with capex rising to $19 billion and year-end net cash estimated at $31–$32 billion.
