Tesla Stock Remains Overvalued Ahead of Earnings, UBS Analysts Say

UBS analysts have called Tesla stock "fundamentally overvalued" ahead of Q2 earnings, citing risks to the company's business, including the US government cutting EV tax credits and CEO Elon Musk's political activity. The analysts will be looking for updates on Tesla's delayed, more affordable vehicle and the recent launch of its robotaxi service. Tesla shares have lost over 20% of their value since the start of the year.

UBS analysts have raised concerns about Tesla's stock valuation, deeming it "fundamentally overvalued" ahead of the company's Q2 earnings report. The analysts cited several risks to Tesla's business, including potential cuts to electric vehicle (EV) tax credits by the U.S. government and Elon Musk's recent political activity [1].

Tesla shares have lost over 20% of their value since the start of the year, reflecting investor concerns over these risks. The analysts will be closely monitoring Tesla's delayed, more affordable vehicle and the recent launch of its robotaxi service for any updates during the earnings call.

The UBS report also highlights the challenges Tesla faces, such as a recent drop in sales and a decline in market share. Tesla delivered 384,122 vehicles in Q2 2025, aligning with analyst consensus but falling below the 443,956 vehicles delivered in the same period last year [1]. The company's gross profit margin remains relatively weak at 17.66%, and analysts have revised their earnings expectations downward for the upcoming period.

Moreover, Tesla's expansion into the Indian market and its robotaxi service in the Phoenix Metro area are expected to be closely scrutinized. The company's entry into the Indian market, with the first showroom opening in Mumbai on July 15, marks a significant step in its global expansion strategy [1].

Despite these challenges, Musk has maintained that Tesla's future rests on robots, artificial intelligence, and self-driving taxis. However, the company's taxi service is still in its early stages, and its rollout has faced several issues, including a video showing a robotaxi traveling on the wrong side of the road [2].

UBS analysts have warned that investors are growing tired of Musk's political distractions and would prefer him to focus on the business. They expect that the company's robotaxi rollout and other strategic initiatives will be crucial in turning around Tesla's financial outlook.

References:
[1] https://ca.investing.com/news/analyst-ratings/tesla-stock-rating-reiterated-at-overweight-by-cantor-fitzgerald-93CH-4100255
[2] https://www.cnn.com/2025/07/08/business/tesla-troubled-financial-outlook