The U.S. electric vehicle (EV) market is expected to have a tougher 2026, with a forecast 15% contraction in annual passenger EV sales. Meanwhile, overall vehicle sales are projected to decline 2.4% to 16.9 million units. Data also shows that EV ownership among U.S. households slipped to 5% in 2025 from 6% in 2023, suggesting the early push into electric and hybrid vehicles may be losing speed.
That slower backdrop is showing up in Tesla’s (TSLA) latest results. Revenue for the fourth quarter came in at $24.9 billion, down 3% year-over-year (YOY). Tesla also gave up its spot as the world’s largest EV maker to Chinese rival BYD (BYDDY), which sold 2.26 million EVs in 2025.
Even with that weakness, Roth Capital Markets analyst Craig Irwin has a different view. After the Q4 2025 earnings release on Jan. 29, Irwin reiterated a “Buy” rating and maintained a $505 price target on TSLA stock, saying he “would be a buyer on any near-term share price weakness.” His view is based on applying a 15 times revenue multiple to 2026 estimates, and the analyst frames Tesla as a large-cap name that trades like an emerging growth stock — where catalysts, not current auto sales, will be the main driver of valuation.
Why would an analyst recommend buying Tesla when its core automotive business is contracting, profit is halving, and its market share is slipping to Chinese competitors? Let’s take a closer look.
Today, Tesla is more than an EV maker. It’s a clean energy company that designs and sells EVs, software, and battery storage, and it makes money from both hardware sales and recurring services.
Over the past 52 weeks, TSLA stock is up by about 10%. Year-to-date (YTD), however, shares are down roughly 6%.
Tesla trades at a forward price‑to‑earnings (P/E) multiple of about 248 times versus roughly 18 times for its broader sector. That premium is based on real results, even if they do not come in a straight line. In Q4 2025, Tesla delivered 418,227 vehicles — missing analyst expectations of 428,536 by 2.4% — and posted total revenue of about $24.9 billion. Automotive revenue was $17.69 billion, slightly below the $17.92 billion consensus estimate, while energy revenue of $3.84 billion and services revenue of $3.37 billion also came in just under estimates of $3.86 billion and $3.38 billion, respectively.
On the profitability front, GAAP operating profit was $1.41 billion, beating the $1.29 billion estimate by 8.8%. Non‑GAAP EPS of $0.50 topped forecasts of $0.45 by 10.8%, showing that Tesla can still protect earnings even when deliveries are light.
Free cash flow margin slipped from 7.9% to 5.7%, and critics see that as a sign that growth still takes heavy investment. But with annual sales of roughly $94.8 billion, net income of around $3.79 billion, and a market capitalization of about $1.43 trillion spread over roughly 3.3 billion shares, Tesla still looks like a company investing for its next phase rather than one in structural decline.
Pilot’s agreement with Tesla to roll out Semi chargers across major freight corridors is a clear sign that the heavy‑duty truck push is moving from prototypes to real-world infrastructure. Tesla Semi Chargers are planned for select Pilot travel centers along I‑5, I‑10, and other high‑traffic routes. Construction is starting in the first half of 2026 and the first sites are expected to open in the summer of 2026.
That matters because it makes it easier for fleet operators to run electric trucks in day‑to‑day service, not just in small tests. The move also broadens Tesla’s opportunity beyond passenger cars and supports longer‑term revenue tied to charging and services.
On the energy side, Tesla’s new European framework agreement with SPIE for battery energy storage systems points in the same direction for stationary storage. SPIE already has experience working with Tesla on projects in Belgium, the Netherlands, and France, and the new agreement puts SPIE in a position to deploy BESS projects across its European subsidiaries for at least the next three years. For Tesla, that means a more organized way to execute utility‑scale and commercial storage work across multiple countries, helping turn what can be an uneven, project‑by‑project business into something more repeatable.
Tesla’s next earnings release is set for April, and Wall Street is looking for $0.30 in EPS for the current quarter. That would be up from $0.15 a year earlier, which works out to 100% YOY growth. For the full year, 2026 EPS is estimated at $1.67 versus $1.09 in 2025, implying a 53% YOY growth rate.
Where Roth’s “buy on weakness” view really separates from the crowd is in how big analysts think Tesla’s long-term upside can be. Wedbush analyst Dan Ives is another bullish voice, keeping a $600 base-case target and an $800 bull-case target for TSLA. That’s based on the idea that Tesla could take roughly 70% of the global autonomous vehicle market over the next decade and reach a $2 trillion to $3 trillion market cap by year-end 2026. Finally, Mizuho is less aggressive but still positive on TSLA stock, lifting its price target to $540 from $530 and keeping an “Outperform” rating after Q4, pointing to faster progress in Full Self-Driving and the “physical AI” narrative.
The rest of the sell side is much more careful, which is why Roth’s stance stands out. Among 41 analysts, Tesla has a consensus “Hold” rating, and the average price target is $401.24. With TSLA stock currently trading around the $417 mark, shares are already above the mean target. That suggests the market is more optimistic than the typical analyst right now.
Irwin’s “buy the dip” call makes sense if you accept that TSLA stock is being priced on catalysts, not just near-term car demand. Tesla is still delivering profits and margin recovery while building out new revenue lanes in trucking infrastructure and utility-scale energy storage. The risk is that the market’s patience runs out if EV demand stays soft and the autonomy story takes longer to monetize, especially with shares already above the Street’s average target.
From here, the direction of travel for TSLA will more likely be sideways-to-higher than sharply lower. That’s because every pullback tends to attract long-term buyers hunting for exposure to FSD, “physical AI,” and energy growth.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com