Tesla Downgraded by Baird Amid Robotaxi Hype, Musk Uncertainty

Baird Capital, a firm that has long been bullish on Tesla, has issued a warning signal by downgrading its rating for the electric vehicle manufacturer. Analyst Ben Kallo reduced the stock rating from "buy" to "hold," marking the first such adjustment in three years. While the firm maintains a target price of 320 dollars, this figure is slightly below Tesla's current trading level, indicating that Baird sees limited upside potential in the short term.

Kallo cited the market's overheated speculation surrounding Tesla's upcoming robotaxi event as a key reason for the rating change. He suggested that current expectations might be overly aggressive, especially considering that Tesla has only recently been added to the Austin autonomous vehicle testing registry. In contrast, Alphabet's Waymo has already progressed to the actual deployment phase.

Kallo also highlighted the "key person risk" posed by Elon Musk's significant influence over Tesla. The CEO's public support for Trump and recent political activities, followed by a sudden public feud with the , have raised concerns about the company's increasing uncertainty. However, recent indications suggest a thawing in relations between Musk and Trump, with reports that Trump has reaffirmed his ownership of a Tesla vehicle and that the White House will continue to use Musk's Starlink equipment.

Despite these concerns, Kallo still views Tesla as a long-term value investment but advises caution in the current phase. Other factors influencing the outlook include intensifying competition in the electric vehicle market, fluctuating delivery expectations, and potential adjustments to tax incentive policies.