Shares of Tesla moved lower in early trading Thursday, even as oil prices climbed following Iran’s rejection of US conditions to end the ongoing conflict.
The stock was down about 1.5% at $379.79, underperforming slightly as broader markets also weakened.
The S&P 500 and Dow Jones Industrial Average were lower by 0.76% and 0.4%, respectively, while benchmark crude prices rose more than 4%.
The decline stands in contrast to Tesla’s historical pattern, where rising oil prices typically supported the stock by improving the relative appeal of electric vehicles.
However, that relationship appears to have weakened.
Tesla shares have fallen about 4% since the start of the Iran conflict, roughly in line with broader market declines, despite the surge in energy prices.
Year to date, the stock is down around 14%, though it remains up 34% over the past 12 months.
Narrowing cost advantage for EVs
One factor weighing on the traditional oil-EV relationship is the shrinking cost advantage of electric vehicles.
A Tesla Model Y can cost roughly $10 in electricity to travel 250 miles when charged at home, compared with about $30 in gasoline for a comparable internal combustion vehicle.
While still cheaper, the gap has narrowed.
Gasoline prices are down about 25% from their 2022 peaks, while retail electricity prices have risen roughly 30% over the same period.
In 2022, the cost difference for the same distance was closer to $30, compared with about $20 today.
The broader outlook for electric-vehicle demand has also softened compared with earlier years.
While US EV adoption expanded rapidly in prior periods, growth expectations have moderated, affecting investor sentiment toward Tesla.
Analyst views remain constructive
Despite near-term headwinds, Wall Street sentiment remains mixed but generally constructive.
RBC Capital Markets reiterated an Outperform rating on the stock with a $500 price target, implying roughly 31% upside from current levels.
The firm expects Tesla to deliver about 367,000 vehicles in the first quarter of 2026, slightly below consensus estimates.
It also anticipates a year-over-year decline in US deliveries due to the absence of consumer incentives, along with a sequential drop from the previous quarter, reflecting seasonal trends.
Given the scale of retail participation in Tesla stock, traders and investors globally will be closely tracking its moves on their online trading platforms ahead of the company’s quarterly sales data release.
Product developments and charging expansion
Amid these pressures, Tesla continues to invest in infrastructure.
The company on Wednesday unveiled a new lower-cost charging solution, known as Folding Unit Superchargers.
According to Max Zegher, Tesla’s senior director of charging for North America, the new units are more compact, reduce installation complexity, and cut costs by at least 20%.
They also allow for deployment at roughly twice the speed of earlier systems.
While long-term growth narratives around autonomy and artificial intelligence remain intact, the stock is currently navigating a more complex environment shaped by softer demand expectations, changing cost dynamics, and broader market volatility.
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