Investing.com -- Tesla (NASDAQ:TSLA) shares may be approaching a turning point, according to Deutsche Bank (ETR:DBKGn), as both investor sentiment and vehicle deliveries show signs of bottoming.
A key reason for renewed optimism is CEO Elon Musk’s decision to reduce his involvement at DOGE, a move Deutsche Bank believes many investors will welcome.
Additional support comes from Tesla’s reaffirmed timeline for launching a more affordable model and the company’s plans to roll out its robotaxi service in Austin this June. Musk has projected that autonomy could deliver a “material” monetary contribution by the second half of 2026 — though analysts at Deutsche call that forecast “aggressive.”
Meanwhile, Deutsche expects Tesla’s second-quarter volumes to recover, helped by the full global ramp-up of the updated Model Y Juniper.
Despite recent media reports suggesting delays, the launch of Tesla’s lower-cost “Model Q” is still expected within the first half of 2025. The model will leverage existing production lines and requires only minor adjustments before the start of production, according to management.
That said, the bank has lowered its full-year delivery forecast by approximately 50,000 units to 1.65 million vehicles, an 8% year-over-year decline, versus the consensus estimate of 1.73 million.
The revision reflects a staggered rollout of Model Q, beginning in the U.S., followed by Europe and China.
While cost execution was stronger than expected in the first quarter, Deutsche now anticipates second-quarter auto margins to improve. However, the second half is expected to be weaker due to tariff-related pressures and model mix.
Overall, auto gross margin excluding credits is forecast to decline by 220 basis points year-over-year to 13.2% in 2025.
Tesla’s first-quarter results were better than feared. Auto gross margin excluding credits came in at 12.5%, topping Deutsche Bank’s estimate of 10.3%, supported by strong cost execution.
However, energy and storage revenue fell short of expectations, and operating expenses rose sharply due to higher AI-related spending.
Free cash flow reached $664 million, well ahead of consensus estimates.
Looking ahead, Tesla’s full-year outlook remains clouded by macro uncertainty, particularly around tariffs on imported components and potential brand perception issues in some markets.
“The U.S. vehicle lineup is about 85% USMCA compliant on a weighted average basis so Tesla should see less impact than most legacy automakers but this is still material,” the analysts wrote.
“Interestingly, the CFO alluded that the impact could be a ‘couple thousand’ dollars per vehicle,” they added.
Deutsche now forecasts $95.5 billion in 2025 revenue and $1.53 in non-GAAP EPS, down from $98.2 billion and $1.80 previously.