JPMorgan Recommends Selling Tesla, Rotating Into Value-Rich Auto Parts Suppliers

JPMorgan analysts issued a new call on Tuesday urging investors to sell Tesla (NASDAQ:TSLA) and reallocate capital into auto parts suppliers Aptiv (NYSE:APTV) and BorgWarner (NYSE:BWA). The reasoning is clear: fundamentals no longer justify Tesla's valuation, while these suppliers offer solid growth at far more attractive prices.

Why JPMorgan Is Turning Bearish on Tesla

Tesla may still dominate headlines, but JPMorgan believes the stock is increasingly vulnerable:

• Sharp EPS Downgrade: Since March 25, when 25% sectoral tariffs were confirmed, Tesla's 2025 EPS estimates have plunged 32%—the steepest drop among major automakers.

• Regulatory Headwinds: Expected termination of key EV subsidies could wipe out up to half of Tesla's global EBIT.

• Brand and Execution Risks: The brand is becoming more controversial, competition is heating up globally, especially in China, and executive churn has raised further concerns.

Despite all this, Tesla still trades at a sky-high 141.2x price-to-earnings, making it highly exposed to any deterioration in sentiment or performance.

Aptiv and BorgWarner: High Growth, Reasonable Price

JPMorgan recommends reallocating into Aptiv and BorgWarner, which are better positioned for long-term returns:

• Electrification Exposure: Both companies are aligned with the EV transition, supplying essential technology for electric drivetrains and vehicle software.

• Attractive Valuations: Aptiv trades at 9.3x forward P/E, while BorgWarner sits at 7.6x, offering exposure to secular EV growth without speculative pricing.

• Lower Regulatory Risk: Unlike automakers, suppliers bear little of the direct impact from tariffs or policy shifts.

To compare valuation and earnings metrics across the sector, tools like the Ratios (TTM) API and the Company Rating API help investors drill down into profitability, leverage, and performance drivers across both automakers and suppliers.