UBS Flags Tesla as Overvalued Despite Expected Q2 Beat

UBS analysts said Monday that Tesla (NASDAQ:TSLA) remains “fundamentally overvalued” heading into its Q2 2025 earnings, even as a sector-wide production beat and FX tailwinds may temporarily lift auto stocks.

In a broader note on U.S. autos, auto-tech, and parts, UBS expects the second-quarter earnings season to surpass estimates, stating, “We expect 2Q25 results to largely beat expectations on better production and FX.”

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Tesla's Earnings Preview: Sentiment vs. Fundamentals

Despite near-term optimism, UBS is skeptical of Tesla's valuation. It forecasts Q2 earnings per share (EPS) at $0.43, in line with consensus, and sees auto gross margins (ex-credits) at 14%, slightly above the Street's 13.5%.

UBS warns that core issues — including policy uncertainty and EV credit phase-outs — remain unresolved:

“We see real risk to regulatory credit revenue for both TSLA and RIVN as well as demand with removal of EV credits.”

The note also highlights the role of CEO Elon Musk's commentary:

“TSLA remains fundamentally overvalued, but the price reaction will depend on Musk's call comments.”

Sector Rerating and Earnings Volatility

UBS cautions that the U.S. auto space has seen a ~20% average valuation rerating since March, despite long-term headwinds. Sentiment may continue to drive short-term volatility, but the underlying structural concerns persist.

For real-time analyst rating changes and target price adjustments across sectors, check the Up/Down Grades by Company API.