3 Thoughts on Impact of Chinese Government Policy on Tesla (TSLA) from Morgan Stanley's China Team

Morgan Stanley analyst Adam Jonas reiterated an Overweight rating and $900.00 price target on Tesla (NASDAQ: TSLA) after hearing 3 insights from the China Autos and Auto-Related team that arose during the ‘EV and EV Battery Chain’ panel:

1) The Chinese government has prohibited government employees from buying a Tesla right now and the China team says this has become a ‘national government policy.’ This has led to Tesla quality issues to be exaggerated in the media. As an example, if a driver of a car hits a policeman, the headline may read “Tesla hits a policeman”. That said, when the analyst team speaks with local (Shanghai) regulators about Tesla, the impression is they are still open to Tesla and still want Tesla to participate in China.

2) The Chinese auto industry still needs Tesla to grow… for now. The Morgan Stanley team believes Chinese auto policy will stay relatively accommodative to foreign players and doesn't believe the Chinese government is trying to wipe out foreign EV players.

3) Investors should expect China to get stricter on the collection and use of data. China cyberspace regulators have already indicated that they will require OEMs to locally store the data from vehicle cameras/vehicle sensors that is needed for autonomous driving.

The analyst stated "Longer-term, we believe, among a wide range of potential outcomes, that the value of Tesla China may come down to the percentage ownership the Tesla ‘parent’ would own in a separate Tesla China legal entity."

For an analyst ratings summary and ratings history on Tesla click here. For more ratings news on Tesla click here.

Shares of Tesla closed at $688.72 yesterday.

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