Morgan Stanley Analyst: Tesla's Ubiquity Limited — Global Auto Players To Surpass Mobile Handset Market Participants

Morgan Stanley analyst Adam Jonas on Tuesday said that Tesla Inc’s TSLA positive stock reaction after the Ford-Tesla collaboration on battery charging infrastructure was less about the economics of the decision and more about the market seeing a potential change in Ford Motor Co‘s F fundamental EV strategy.

The Tesla Analyst: Jonas maintained an ‘overweight’ rating on EV giant Tesla with a price target of $200.

The Tesla Thesis: As charging becomes more available, the size and design of Ford’s battery itself will be impacted, Jones said.

Jonas said that there is no doubt that legacy automakers will come up with compelling EV products which may sell for a profit as Tesla’s universality in the EV market has its limits.

“We believe the number and variety of players in the global auto market may vastly exceed the number and concentration of players in the mobile handset market today,” the note added.

The analyst opined that Ford must continue investing in its EV strategy but with greater caution. They must spend but with greater evaluation and align the sources of cash flow with the use of the money, the analyst said.

Tesla’s ‘new era’ of competition may accelerate positive change in capital discipline for Detroit, the analyst concluded.

Early in May, Ford said that it sees $3 billion of loss in its EV division. For the first quarter, the segment generated $700 million, down 27% year-over-year.

Overall, however, Ford reported a 20% jump year-over-year to $41.5 billion, beating consensus estimates of $36.03 billion.

But despite the skidding EV results, the Detroit-based automaker expects to up manufacturing capabilities to a global run rate of 600,000 EV units by the end of 2023 and to over 2 million by the end of 2026.

Price Action: On Wednesday, Ford shares closed 4.7% lower at $12 in the regular session while Tesla closed 1.4% higher at $203.93

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