Tesla (TSLA): Morgan Stanley Cautious Amid 'Near-Term Disruption in China and Slow Ramps in Berlin and Austin'

Morgan Stanley analyst Adam Jonas has reflected on Tesla (NASDAQ: TSLA) and the wider electric vehicle (EV) market amid mounting headwinds.

The analyst notes that the supply chain is under “tremendous stress” as inflation is weighing on demand and capital markets are “less ebullient.”

“Tesla had a strong 1Q, but have investors factored in the Shanghai lockdowns? We’d allow room in the forecasts for near-term disruption in China and slow ramps in Berlin and Austin,” the analyst said in a client note.

He also discussed situations at Rivian (NASDAQ: RIVN) and Lucid (NASDAQ: LCID), which were forced to prioritize cost control over growth. When it comes to Ford (NYSE: F) and General Motors (NYSE: GM), the analyst asks “how can they spend cash they may not have?”

“Where will the battery metal come from? We believe many of the headline-grabbing EV sales targets made by traditional OEMs were made without fully contemplating the availability (and price) of critical battery materials. Material inflation must hit demand at some level. How does a 5x move in Lithium carbonate prices not impact affordability, and ultimately, unit volume?”

While Jonas remains a firm long-term EV bull, he said downside revisions for the adoption through mid-decade are possible. The analyst is especially concerned about the “FY24/25 to FY30 time horizon.”

“While we believe many geopolitical and economic and technological forces will drive higher EV penetration over time, we feel there may be material room to ‘push down the curve’ for the near term to allow for a necessary re-architecture of the supply chain and expansion of capacity to bring EVs to the price point required to fulfill the higher penetration scenarios,” Jonas added in a note.

By Senad Karaahmetovic

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