Big auto ‘blinking’ seen as Tesla buying opportunity by Morgan Stanley

Big auto 'blinking' seen as Tesla buying opportunity by Morgan Stanley
© Reuters. Big auto ‘blinking’ seen as Tesla buying opportunity by Morgan Stanley’s Adam Jonas

By Sam Boughedda

Morgan Stanley analysts questioned whether big automotive companies are “blinking” on electric vehicles and said they see this as a buying opportunity for Tesla (NASDAQ:TSLA).

The analysts reiterated an Overweight rating and $330 price target on Tesla shares in their note on Wednesday.

“Big auto blinking? It was far easier to take EV hegemony for granted at 0% Fed funds and when Tesla was a trillion $ company. Are we sure batteries are the only (or ultimate) path to decarbonizing transport? Is the technology cheap enough? Is our electric grid ready? Are the enabling policies viable? Stories like Porsche (covered by Harald Hendrikse) investing in eFuels as a ‘dual path’/complementary technology to EVs is worth watching,” questioned analysts.

They added that Tesla has shed $600 billion of value in just three months, and as the ‘ambassador’ of EVs, its valuation “raises questions for investment returns and capital formation across the sector.”

Tesla shares are up over 1% so far on Wednesday, but the stock has declined more than 12% in the last week and over 63% this year.

“Look for Tesla to use its cost and scale advantage as a competitive force,” the analysts continued. “Tesla’s price cuts started in China and we expect them to quickly spread to Europe and the US. While circular in nature, lower EV prices are important for the next leg of mass adoption, but depress the returns of many of the companies expected to compete against Tesla.”