Tesla pulls back after 8% surge as copper costs rise

Tesla shares pulled back early Tuesday after Monday's 8% surge to $411.84, as rising copper prices added to cost pressures facing the electric-vehicle maker and the broader auto industry.

"Tesla's auto volumes have become increasingly an afterthought, with the stock driven mostly by robotaxi, Optimus and AI expectations," Barclays analysts said in a note, maintaining an Equal Weight rating and $360 price target on the stock. The target implies a 13% downside from Monday's close.

The pullback came as copper prices extended gains, squeezing margins for automakers that rely on the metal for wiring and battery components. Ferrari and BMW are launching new models featuring lightweight aluminum wiring to reduce copper use, following similar moves by Tesla and Chinese EV makers. JPMorgan estimates the industry shift could affect about 2% of global copper demand, a meaningful figure for a metal that has been a key beneficiary of the EV transition.

For Tesla, copper represents a direct cost input at a time when the company is navigating a transition from volume growth to an autonomy and AI-driven business model. Cantor Fitzgerald projects Tesla will deliver 397,414 vehicles in the second quarter, below the consensus estimate of 408,609, but sees energy storage deployments reaching 15.7 gigawatt-hours, above expectations of 13.9 GWh. Tesla's first-quarter free cash flow of $1.44 billion came in well above consensus expectations for a $1.78 billion outflow, though the company raised its 2026 capital expenditure guidance to more than $25 billion from $20 billion.

Copper Costs Reshape Auto Supply Chains

The auto industry's response to copper prices is accelerating. Ferrari and BMW are adopting aluminum wiring in new models, a shift from copper that has dominated electrical wiring since the invention of the electric battery two centuries ago. Tesla and Chinese EV makers have already made similar moves. The trend, if sustained, could reshape demand dynamics for copper, a metal that has benefited from the EV boom.

The shift comes as automakers face pressure on multiple fronts. Gold fell below $4,000 an ounce and is on track for its biggest quarterly decline in more than a decade, losing about 15% this quarter. The dollar strengthened for a fourth consecutive quarter, pushing the yen to a four-decade low past 162 against the greenback, a move that boosts export profits for Japanese automakers but raises import costs for oil and gas shipments priced in dollars.

Tesla's Dual Narrative: Near-Term Delivery Pressure, Long-Term AI Bet

Cantor Fitzgerald called 2026 a "transformational year" for Tesla, citing the Cybercab, Tesla Semi and Megapack 3 as material catalysts on track for volume production. The firm also highlighted the Optimus humanoid robot, noting that Tesla's first-generation production line is being installed in California with a 1 million-unit annual capacity target, while a second-generation line at Gigafactory Texas targets 10 million units.

Tesla shares closed at $411.84 on Monday, their best single-day gain in over a year, boosted by the rollout of FSD V14 Lite to early-access Hardware 3 owners, giving older vehicles a long-awaited software upgrade. The broader market also rallied, with the Dow Jones Industrial Average hitting an all-time closing high, the S&P 500 rising 1.2% and the Nasdaq climbing 2.1% as technology stocks rebounded from a recent selloff.

Analysts remain divided on Tesla's near-term prospects. Barclays expects 418,000 deliveries, above consensus, while Cantor's 397,414 estimate sits below the Street. The divergence reflects a broader debate about whether Tesla should be valued as an automaker or as an AI and robotics company — a distinction that carries a wide valuation gap. Tesla shares trade at a premium to traditional automakers, reflecting the market's willingness to price in future autonomy and AI revenue that has yet to materialize in the income statement.

This article is for informational purposes only and does not constitute investment advice.