Morgan Stanley sees strength in Tesla (TSLA) as EV market transitions

Morgan Stanley reiterated an Overweight rating and $250.00 price target on Tesla (NASDAQ: TSLA) as analysts believe the global EV market has begun a transition from acute under supply to potential oversupply.

Analyst Adam Jonas believes that 2023 is the year execution on manufacturing costs and supply chain management will “further separate the winners from the challenged.” Jonas believes that EV companies will be required to bring forth more affordable electric vehicle prices that can unlock further penetration growth.

Jonas wrote in a note, “Over the next few years, we anticipate the rate of change of EV penetration has potential to disappoint as investors, consumers and regulators contemplate the hidden costs of diversification from a Chinese dominated EV supply chain into a market where many players have yet to prove viability of the business model.”

Morgan Stanley believes that Tesla is uniquely positioned to lead engineering and cost improvements. However, nearer term, investors must contemplate further deflation across the EV sector that may drive an unfavorable reset of margin expectations.

Shares of TSLA are up 0.80% in pre-market trading on Wednesday.

By Michael Elkins | [email protected]

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