Italian luxury sports car maker Ferrari (NYSE: RACE) is Morgan Stanley’s pick as the firm’s “favorite electric vehicle stock for 2022,” according to a note released by the Autos and Shared Mobility team. Led by analysts Adam Jonas, Morgan Stanley’s team of stock professionals chose Ferrari over other high-powered EV stock favorites, including Rivian and Tesla, both of which are widely considered the most promising and overall leader of the EV industry, respectively.
“Ferrari was listed as “Our new ‘Top Pick’ (replacing GM),” Morgan Stanley wrote in a note to investors released this morning. “Can justify 100% of the company’s market cap with ‘fine-art’ ICE business…leaving [for] the EV business (currently in skunkworks) for free. This makes RACE our favorite EV stock for 2022.” Ferrari was listed ahead of Rivian, which is ranked 2nd on Morgan Stanley’s list, and Tesla, which sits in fourth, behind Freyr, a Norway-based company in the business of manufacturing battery cells with sustainable energy.
US Auto Stock Rankings for FY 22 | Morgan Stanley/Adam Jonas
Ferrari is the new ‘Top Pick’ ?? $RACE$GM$RIVN$TSLA pic.twitter.com/KRcbjahHOb
— David Tayar (@davidtayar5) January 4, 2022
Morgan Stanley’s outlook on Ferrari is interesting, especially as the company has not technically made any formal statement regarding plans to transition to a full lineup of electric cars. The Italian company does have plans to launch its first all-electric model in 2025, company boss John Elkann said in April 2021. Ferrari’s commercial boss, Enrico Galliera, said it would not produce any BEV models until EV tech would allow the company to “produce a car that fits with our position.” Galliera said, “If we bring in new technology, then we need to bring something new to the market. That’s how Ferrari has always worked with new technology. The evolution of new technology is 100% in the DNA of Ferrari.”
The company’s position regarding EVs was only solidified in 2021, as Elkann stated during the Ferrari Q2 Earnings Call that executives welcomed regulations that would restrict the widespread production of gas-powered engines. However, there could be a substantial wait for Ferrari to make a full-fledged shift to EVs, as Elkann added, “… we’ll have changes within the energy supply, which could lead to having alternatives, for example, e-fuels or hydrogen. But that is really 2030, 2040, and most likely midpoint 2035, where we’ll see this happening. What we want to make sure is to be able to use the technologies available, which today are hybrid going to electric and exploiting those to the fullest and in the best way possible.”
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Morgan Stanley placed an “Overweight” rating on Ferrari with a $350 price target. Ferrari shares were trading at $235.10 at the time of writing.
Interestingly, Rivian and Tesla were subsided by Morgan Stanley’s note. Rivian began deliveries of its first EV, the R1T pickup truck, in late October. Morgan Stanley’s note indicates that Rivian (NASDAQ: RIVN) is “The One” for your portfolio, based on “a clean-sheet strategy with deterministic capital (raised ~$25bn) focused on adventure and commercial fleets.” Analysts stated that 2022 will be a tumultuous year for the automaker’s stock as it attempts to ramp manufacturing. Rivian will break ground on its second U.S. facility during Summer 2022. The new plant will be located near Atlanta, Georgia.
Rivian was given an “Overweight” rating with a $147 price target. Shares were trading at $100.65 at the time of writing.
Meanwhile, Tesla (NASDAQ: TSLA) is ranked as the fourth-best EV stock for 2022. “While Tesla is not our top EV pick, it’s arguably our most ‘important’ stock pick. Not owning Tesla means not owning the one company that could make all your other EV names obsolete. A big 4Q delivery beat is just the opening act. Gigapress and structural pack come to life in 2022.”
Tesla will also have Gigafactory Berlin and Gigafactory Texas coming to life this year, which could expand the production output by 1 million units when coupled with potential expansions at Fremont and Gigafactory Shanghai. Tesla came just shy of the 1 million unit mark that many thought the company would reach this year. However, the automaker is still the most valuable car company in the world and is the sole reason for the EV movement in 2022.
Morgan Stanley gave Tesla an “Overweight” rating with a price target of $1,200. Shares were trading at $1,143 at the time of writing.
Disclosure: Joey Klender is a $TSLA Shareholder. He currently does not own any $RACE or $RIVN shares.
I’d love to hear from you! If you have any comments, concerns, or questions, please email me at joey@teslarati.com. You can also reach me on Twitter @KlenderJoey, or if you have news tips, you can email us at tips@teslarati.com.
There are a lot of Tesla bulls out there who have astronomical expectations for the company, especially as its arm of reach has gone well past automotive and energy and entered artificial intelligence and robotics.
However, some of the most bullish Tesla investors believe the company could become worth $100 trillion, and CEO Elon Musk does not believe that number is completely out of the question, even if it sounds almost ridiculous.
To put that number into perspective, the top ten most valuable companies in the world — NVIDIA, Apple, Alphabet, Microsoft, Amazon, TSMC, Meta, Saudi Aramco, Broadcom, and Tesla — are worth roughly $26 trillion.
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Cathie Wood of ARK Invest believes the number is reasonable considering Tesla’s long-reaching industry ambitions:
“…in the world of AI, what do you have to have to win? You have to have proprietary data, and think about all the proprietary data he has, different kinds of proprietary data. Tesla, the language of the road; Neuralink, multiomics data; nobody else has that data. X, nobody else has that data either. I could see $100 trillion. I think it’s going to happen because of convergence. I think Tesla is the leading candidate [for $100 trillion] for the reason I just said.”
Musk said late last year that all of his companies seem to be “heading toward convergence,” and it’s started to come to fruition. Tesla invested in xAI, as revealed in its Q4 Earnings Shareholder Deck, and SpaceX recently acquired xAI, marking the first step in the potential for a massive umbrella of companies under Musk’s watch.
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Now that it is happening, it seems Musk is even more enthusiastic about a massive valuation that would swell to nearly four-times the value of the top ten most valuable companies in the world currently, as he said on X, the idea of a $100 trillion valuation is “not impossible.”
It’s not impossible
— Elon Musk (@elonmusk) February 6, 2026
Tesla is not just a car company. With its many projects, including the launch of Robotaxi, the progress of the Optimus robot, and its AI ambitions, it has the potential to continue gaining value at an accelerating rate.
Musk’s comments show his confidence in Tesla’s numerous projects, especially as some begin to mature and some head toward their initial stages.
Elon Musk
Tesla director pay lawsuit sees lawyer fees slashed by $100 million
The ruling leaves the case’s underlying settlement intact while significantly reducing what the plaintiffs’ attorneys will receive.
The Delaware Supreme Court has cut more than $100 million from a legal fee award tied to a shareholder lawsuit challenging compensation paid to Tesla directors between 2017 and 2020.
The ruling leaves the case’s underlying settlement intact while significantly reducing what the plaintiffs’ attorneys will receive.
Delaware Supreme Court trims legal fees
As noted in a Bloomberg Law report, the case targeted pay granted to Tesla directors, including CEO Elon Musk, Oracle founder Larry Ellison, Kimbal Musk, and Rupert Murdoch. The Delaware Chancery Court had awarded $176 million to the plaintiffs. Tesla’s board must also return stock options and forego years worth of pay.
As per Chief Justice Collins J. Seitz Jr. in an opinion for the Delaware Supreme Court’s full five-member panel, however, the decision of the Delaware Chancery Court to award $176 million to a pension fund’s law firm “erred by including in its financial benefit analysis the intrinsic value” of options being returned by Tesla’s board.
The justices then reduced the fee award from $176 million to $70.9 million. “As we measure it, $71 million reflects a reasonable fee for counsel’s efforts and does not result in a windfall,” Chief Justice Seitz wrote.
Other settlement terms still intact
The Supreme Court upheld the settlement itself, which requires Tesla’s board to return stock and options valued at up to $735 million and to forgo three years of additional compensation worth about $184 million.
Tesla argued during oral arguments that a fee award closer to $70 million would be appropriate. Interestingly enough, back in October, Justice Karen L. Valihura noted that the $176 award was $60 million more than the Delaware judiciary’s budget from the previous year. This was quite interesting as the case was “settled midstream.”
The lawsuit was brought by a pension fund on behalf of Tesla shareholders and focused exclusively on director pay during the 2017–2020 period. The case is separate from other high-profile compensation disputes involving Elon Musk.
Investor's Corner
Tesla (TSLA) Q4 and FY 2025 earnings call: The most important points
Executives, including CEO Elon Musk, discussed how the company is positioning itself for growth across vehicles, energy, AI, and robotics despite near-term pressures from tariffs, pricing, and macro conditions.
Tesla’s (NASDAQ:TSLA) Q4 and FY 2025 earnings call highlighted improving margins, record energy performance, expanding autonomy efforts, and a sharp acceleration in AI and robotics investments.
Executives, including CEO Elon Musk, discussed how the company is positioning itself for growth across vehicles, energy, AI, and robotics despite near-term pressures from tariffs, pricing, and macro conditions.
Key takeaways
Tesla reported sequential improvement in automotive gross margins excluding regulatory credits, rising from 15.4% to 17.9%, supported by favorable regional mix effects despite a 16% decline in deliveries. Total gross margin exceeded 20.1%, the highest level in more than two years, even with lower fixed-cost absorption and tariff impacts.
The energy business delivered standout results, with revenue reaching nearly $12.8 billion, up 26.6% year over year. Energy gross profit hit a new quarterly record, driven by strong global demand and high deployments of MegaPack and Powerwall across all regions, as noted in a report from The Motley Fool.
Tesla also stated that paid Full Self-Driving customers have climbed to nearly 1.1 million worldwide, with about 70% having purchased FSD outright. The company has now fully transitioned FSD to a subscription-based sales model, which should create a short-term margin headwind for automotive results.
Free cash flow totaled $1.4 billion for the quarter. Operating expenses rose by $500 million sequentially as well.
Production shifts, robotics, and AI investment
Musk further confirmed that Model S and Model X production is expected to wind down next quarter, and plans are underway to convert Fremont’s S/X line into an Optimus robot factory with a capacity of one million units.
Tesla’s Robotaxi fleet has surpassed 500 vehicles, operating across the Bay Area and Austin, with Musk noting a rapid monthly expansion pace. He also reiterated that CyberCab production is expected to begin in April, following a slow initial S-curve ramp before scaling beyond other vehicle programs.
Looking ahead, Tesla expects its capital expenditures to exceed $20 billion next year, thanks to the company’s operations across its six factories, the expansion of its fleet expansion, and the ramp of its AI compute. Additional investments in AI chips, compute infrastructure, and future in-house semiconductor manufacturing were discussed but are not included in the company’s current CapEx guidance.
More importantly, Tesla ended the year with a larger backlog than in recent years. This is supported by record deliveries in smaller international markets and stronger demand across APAC and EMEA. Energy backlog remains strong globally as well, though Tesla cautioned that margin pressure could emerge from competition, policy uncertainty, and tariffs.
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