TD Cowen Upgrades Tesla to Buy, Boosts Price Target to $388

Analyst Sees Strong Growth Potential for Tesla Stock in 2025 / Reuters

Tesla (NASDAQ:TSLA), a leading name in the electric vehicle industry, recently received a significant vote of confidence from TD Cowen, which upgraded its rating on the stock from Hold to Buy while raising its Tesla stock price target from $180 to an impressive $388. This adjustment reflects a potential 47% increase from the stock’s recent closing price, signaling a bullish outlook for Tesla’s future performance despite ongoing challenges in the electric vehicle market. TD Cowen’s decision comes amid Tesla’s pivot toward autonomous driving technology, robotics innovation, and efforts to rebound from a tough year marked by declining deliveries and valuation losses. The investment bank’s analysts highlighted Tesla’s promising long-term prospects in electric vehicles (EVs), self-driving capabilities, and robotics as key drivers behind this Tesla stock upgrade, positioning it as a compelling opportunity for investors seeking growth in the EV sector. As of March 6, 2025, Tesla’s stock price hovers around $261, making this a pivotal moment to explore the factors shaping its trajectory and the risks that could influence its path forward.

TD Cowen’s updated Tesla stock forecast for 2025 and 2026 centers on expectations of mid-teens delivery growth, meaning an annual increase of 10% to 19%, alongside improved profit margins. This projection does not yet factor in potential breakthroughs in Tesla’s autonomous vehicle technology or its robotics initiatives, such as the Optimus robot, which could serve as additional catalysts for growth. The analysts acknowledged that Tesla faces a challenging first quarter in 2025, likely due to lingering effects of softened global automobile demand and intensified competition from Chinese EV manufacturers like BYD. However, they anticipate a turnaround in subsequent quarters, driven by Tesla’s strategic focus on new EV models and operational efficiencies. Notably, TD Cowen emphasized that Tesla appears less vulnerable to tariff risks compared to peers, possibly due to its localized production efforts, such as the Gigafactory in Berlin and reduced reliance on imports from China. This resilience strengthens the case for Tesla stock investment opportunities, especially as the company navigates a complex global trade landscape under potential policy shifts from the Trump administration.

The Tesla stock price analysis from TD Cowen paints a detailed picture of both upside potential and downside risks. On the optimistic side, successful deployment of Tesla’s self-driving technology could revolutionize its market position, potentially leading to the introduction of new autonomous vehicles and a surge in demand for its robotics products. The Optimus robot, in particular, represents an ambitious step into artificial intelligence applications beyond automotive, which could diversify Tesla’s revenue streams if brought to market effectively. Additionally, the launch of a lower-cost EV model, expected in mid-2025 with a price tag under $30,000, alongside a refreshed Model Y, could reignite consumer interest and boost sales volumes. These developments align with Tesla’s historical ability to innovate and capture market share, reinforcing TD Cowen’s confidence in its Tesla stock price prediction of $388. However, the analysts cautioned that risks remain, including the possibility of trade tariffs disrupting supply chains and a potential repeal of the Inflation Reduction Act, which currently provides EV purchase subsidies under the Biden administration. A failure to deliver on self-driving milestones could also undermine investor trust, especially given Tesla’s heavy emphasis on this technology as a growth driver.

Tesla’s recent performance provides critical context for understanding TD Cowen’s Tesla stock market outlook. In 2024, the company experienced its first annual decline in deliveries, dropping to 1,789,226 vehicles from 1.81 million the previous year, a setback attributed to fierce competition and a cooling global EV market. This decline contributed to a nearly one-third loss in Tesla’s valuation in 2025 so far, with the stock falling from an estimated $391 at the year’s start to its current level of approximately $261. The downturn has been compounded by concerns over CEO Elon Musk’s public statements and political involvement, which some analysts suggest may have alienated segments of Tesla’s customer base, particularly in Europe where sales dropped sharply in markets like Germany. Despite these headwinds, Tesla achieved a record 495,000 deliveries in Q4 2024, offering a glimmer of hope for recovery. TD Cowen’s Tesla stock investment analysis suggests that this resilience, combined with upcoming product launches and cost-cutting measures, could pave the way for a rebound, making the stock an attractive buy for those willing to weather short-term volatility.

Financially, Tesla’s latest earnings shed light on its current state and future potential. In Q4 2024, the company reported revenue of $25.71 billion, a modest 2% increase year-over-year, though automotive revenue dipped 8% to $19.8 billion due to pricing pressures. Operating income fell 23% to $1.6 billion, reflecting the competitive strain, yet regulatory credits provided a $692 million boost, underscoring Tesla’s ability to leverage external incentives. Looking ahead, TD Cowen’s Tesla stock price forecast hinges on margin improvements, potentially driven by reduced production costs and higher sales of higher-margin models. The next earnings report, due April 29, 2025, will be a critical indicator of whether Tesla can meet these expectations and regain momentum. For investors, this blend of challenges and opportunities highlights the importance of a long-term perspective when evaluating Tesla stock growth potential.

TD Cowen’s upgrade stands out among varied analyst opinions on Tesla’s future. While some forecasts, like Bernstein’s, align with the mid-teens growth projection, others remain cautious, with median targets closer to $242 and bearish predictions warning of a further decline. The stock’s 52-week range, from $138.80 to $488.54, illustrates its volatility, with recent drops of 15.82% in a week and 29.11% over a month adding to the uncertainty. Yet, the average analyst target of $340.68, as reported by sources like TipRanks, supports a cautiously optimistic view, with TD Cowen’s $388 target reflecting a more aggressive stance on Tesla’s ability to capitalize on its technological edge. For those researching Tesla stock investment strategies, this upgrade underscores the stock’s potential as a high-risk, high-reward play, particularly as it pivots toward AI and robotics to offset weaknesses in its core EV business.

In the broader EV market, Tesla remains a dominant force despite growing competition. Chinese rivals have gained ground, but Tesla’s brand strength, global production network, and innovation pipeline continue to set it apart. The company’s efforts to localize manufacturing and challenge tariffs, such as its legal push against EU levies on Chinese-made EVs, enhance its adaptability. For investors exploring Tesla stock price trends in 2025, TD Cowen’s analysis offers a compelling narrative: a company at a crossroads, with the potential to reclaim its growth trajectory if it executes on its ambitious vision. Whether Tesla can overcome near-term hurdles and deliver on its promises in autonomous driving and robotics will ultimately determine if it reaches the $388 target, making it a stock to watch closely in the coming quarters.