Baird reiterates "neutral" rating on Tesla, Inc. (TSLA.US) as weak automotive business leads to downward revision of delivery expectations.

Analysts at Baird have reiterated their "neutral" rating on Tesla, Inc. (TSLA.US) and lowered their delivery and regulatory credit expectations for the second half of 2025, citing signs of weakness in the company's automotive business. The analyst believes that the market's profit expectations for Tesla, Inc. are still too high, and calls on the company to provide a clear timeline for its autonomous taxi and Optimus projects. Tesla, Inc. is currently facing multiple legal and regulatory challenges. A class action lawsuit approved by a California judge in August 2025 ruled that Tesla, Inc. had misled consumers about the capabilities of its Full Self-Driving (FSD) system for eight years. This ruling, along with a $329 million payout for a 2019 crash involving the Autopilot system, indicates a significant shift in liability for autonomous driving courts are now holding automakers accountable for marketing practices that create a false sense of security, while still emphasizing the driver's duty of care. Further lawsuits in Florida have exposed systemic defects in Tesla, Inc.'s operations: the company has been accused of delaying critical safety updates and promoting its Autopilot system as "near autonomous" even though it only offers partial driving assistance. These rulings reflect a growing scrutiny of the ethical deployment of AI systems by regulators, and investors should be wary of the systemic impacts of governance flaws and ethical risks associated with AI technology. Legal risks now extend beyond stock price fluctuations. In addition to class action lawsuits and regulatory investigations, the punitive damages from a "perfect storm" are reshaping the framework for autonomous driving liability. Analysts emphasize that Tesla, Inc. needs to stabilize market expectations by transparently disclosing its profit path and commercialization timeline for autonomous driving technology, especially in regards to autonomous taxis and the Optimus humanoid robot project with Siasun Robot&Automation. Clear technical milestones will be key to assessing its long-term value in the capital markets.