More: Musk Predicts Tesla’s 2025 Sales Will Surge 30%, Gives A Nice Boost To Share Prices Additional points in the report highlight Tesla’s confidence in scaling its supply chain, particularly in China, while also emphasizing the challenge of flawless execution in North America. Regarding Tesla’s much-discussed Mexico plant, its future hinges on geopolitical factors and tariff policies under the new Trump administration, which is an unpredictable variable, to say the least. A Critical Year Ahead While the Deutsche Bank document offers an intriguing glimpse into Tesla’s roadmap, it stops short of providing concrete details. What we do know is that 2025 is shaping up to be a pivotal year for the EV maker, with affordability and versatility taking center stage. Looming over all of this, however, is the potential for a seismic shift in America’s EV policy. If the upcoming Trump administration scraps the $7,500 federal tax credit – arguably the key driver of EV sales – Tesla and the broader industry could face serious headwinds. Germany serves as a cautionary tale; after subsidies were cut in December 2023, Tesla’s sales there plummeted by over 43% this year. Obviously, the stakes couldn’t be higher. Yet, as always with Tesla, the answers remain as unpredictable as the company itself. Puts and takes for 2025 margins Tesla explained that 2025 will be a year of product launches, and whenever that happens, there will be disruption to profitability as it will be in the early days of building a product and have more inefficient fixed cost absorption. But this could be offset by a lower cost of goods sold from the more affordable products. 2025 margins will also hinge upon where ASP (Average Selling Prices) lands based on the demand curve. The main goal is to focus on growing volume and garnering incremental gross profit (as opposed to targeting a certain gross margin %), delivering at least overall FCF (Free Cash Flow) breakeven. The auto business is basically funding more ambitious future projects. TAGS