Al Root

Tesla stock was rising in early trading Tuesday. Investors are looking for a green number.

The electric-vehicle maker's shares have been hammered recently despite its relatively strong ability to weather President Donald Trump's tariffs. There are a few reasons for that.

Shares of the EV company run by CEO Elon Musk were up 1.7% at $237.28 in early Tuesday trading, while S&P 500 and Dow Jones Industrial Average futures were rising 1.6% and 2.1%, respectively.

Coming into Tuesday trading, Tesla stock lost 17.5% over the past three trading sessions. Those are the three days following Trump's "Liberation Day" when he announced higher-than-expected tariffs.

Ford Motor and General Motors shares were down about 9%. Toyota Motor and Honda Motor's U.S.-listed American depositary receipts were both down less than 10%. Volkswagen shares were down about 8% in overseas trading.

Only Stellantis shares had a more severe drop than Tesla. It's stock was down about 17.8%, only fractions of a percentage point worse than Musk's EV maker.

Declines came despite Tesla importing fewer cars into the U.S. than any of those auto makers. Tesla imports none. The average among the rest is roughly 50%. Those imported cars face tariffs of 25%, raising costs for everyone else more significantly than for Tesla.

(Everyone faces additional tariffs on imported parts.)

One reason Tesla stock is down more than others is simply valuation. Its shares trade for almost 90 times estimated 2025 earnings. The other auto makers trade for less than nine times on average.

Tesla also has a higher risk of retaliation. China announced reciprocal tariffs on the U.S. following Trump's April 2 announcement. That doesn't affect Tesla directly. It isn't importing cars into China. It makes them at its plant in Shanghai. Still, anything that China could do to disadvantage American companies would hurt Tesla relatively more than other auto makers.

China accounted for about 22% of Tesla's 2024 revenue.

The global auto sector has been upended by tariffs. What investors want most is likely a negotiated solution between the U.S. and other countries with tariff rates lowered materially. What investors would take is a couple of days of stock gains on successive days so they can catch their breath.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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April 08, 2025 05:07 ET (09:07 GMT)

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