Tesla’s rating gets cut again on slowing EV demand, rising inventory

Mizuho is moving to the sidelines on three electric vehicle names on demand concerns. The firm downgraded Tesla (TSLA), Rivian (RIVN) and Nio (NIO) to Neutral saying that while it remains constructive on the broader EV landscape with the long-term trend to electrification, near-term EV demand and tightening liquidity are creating challenges into 2025.

SLOWING DEMAND: Mizuho downgraded Tesla, Rivian and Nio to Neutral from Buy, citing slowing EV, rising inventories, high prices with subsidy sunsets, and few new launches near-term. The firm remains constructive on the broader electric vehicle landscape with the long-term trend to electrification, but says near-term electric vehicle demand and tightening liquidity are creating challenges into 2025. Mizuho now sees 2024 EV growth up 15% year-over-year versus up 25% previously. The firm was cautious on EV early 2024, and 2024 EV sales expectations are decelerating faster than expected with 2025 bogeys too challenging. Mizuho now sees 2024 EV growth at about 15% year-over-year and 2025 at up 17%.

Regarding Tesla, the firm says the company remains the global leader with scale/profitability bar none, but moderating growth, China competition, and higher inventory are challenges. Mizuho lowered its price target on the shares to $195 from $270.

Discussing Rivian, the firm further notes that while lower-price R2 is positive, it is slated for the first half of 2026, and could cannibalize near-term R1 sales. While Rivian has strong branding and a solid consumer and commercial SUV/Truck portfolio, high R1 prices are challenging, with low-price R2/R3 still distant at the first half of 2026, Mizuho adds. The firm lowered its price target for the shares to $12 from $24.

Mizuho also lowered its price target for Nio to $5.50 from $15 on elevated competition and limited pricing leverage, while raising Buy-rated Autoliv’s (ALV) target to $135 from $115 on continued content gains and market share driving top-line growth above LVP, and Buy-rated General Motors’ (GM) target to $48 from $44 as the firm continues to favor its more measured EV rollout strategy.

OTHER RECENT DOWNGRADES: Wells Fargo previously downgraded Tesla to Underweight, the firm’s equivalent of a sell rating, with a price target of $125, down from $200, on March 13.

Phillip Securities downgraded Tesla to Neutral from Accumulate with a $175 price target on February 19, while Daiwa downgraded Tesla to Neutral from Outperform with a price target of $195, down from $245, on February 6.

WHAT’S NOTABLE: Shares of Tesla were under pressure on Friday following a Bloomberg report that the company has reduced electric car production at its plant in China amid sluggish sales growth and intense competition. Earlier this month, employees at its Shanghai facility were instructed to work five days a week instead of the usual 6 1/2 days to lower production, people familiar with the matter told Bloomberg. Staff have not been given a clear update as to when production will return to normal, the report added. 

PRICE ACTION: In morning trading, shares of Tesla are fractionally up at $171.06, while Rivian’s stock has slipped about 2% to $10.60. Nio has gained a little over 1% to $4.96.