In a bold call on Tuesday, JPMorgan analysts advised investors to sell Tesla (NASDAQ: TSLA) and reallocating investment into Aptiv (NYSE: APTV) and BorgWarner (NYSE: BWA). The rationale? Current fundamentals fail to support Tesla’s valuation, while these suppliers showcase robust growth potential at more appealing prices.

Bearish Sentiment Towards Tesla

Although Tesla remains a high-profile player, JPMorgan perceives increasing vulnerabilities:

• Declining Earnings Estimates: Since March 25, when a 25% tariff was confirmed, Tesla’s 2025 earnings estimates have plummeted by 32%, the steepest decline among major automakers.

• Regulatory Challenges: Anticipated cancellation of key electric vehicle subsidies could diminish Tesla’s effective earnings before interest and taxes (EBIT) by up to 50%.

• Brand and Managerial Instability: Competitive pressures are intensifying globally, particularly in the Chinese market, raising brand-related risks.

Despite these factors, Tesla’s stock continues to trade at an exorbitant 141.2x price-to-earnings ratio, rendering it particularly vulnerable to sentiment changes.

Opportunities in Aptiv and BorgWarner

JPMorgan highlights Aptiv and BorgWarner as viable alternatives due to their favorable positioning for long-term gains:

• Alignment with Electrification Trends: Both Aptiv and BorgWarner play crucial roles in supplying technology essential for electric drivetrains.

• Attractive Valuations: Aptiv’s forward P/E stands at 9.3x, and BorgWarner’s at 7.6x, providing exposure to electric vehicle growth without speculative overpricing.

• Lower Risk from Regulation: Automotive suppliers like Aptiv and BorgWarner face minimal direct repercussions from tariffs or policy changes.

For comprehensive insights into valuation and earnings metrics, investors can leverage tools such as Ratios (TTM) API and Company Rating API to evaluate profitability across the automaker and supplier sectors.