Investor's Corner
Tesla has Morgan Stanley taking bullish and bearish stances in China
Tesla’s (NASDAQ: TSLA) automotive operation in China has Morgan Stanley analysts taking bullish and bearish stances. A new note from the Wall Street firms indicates short-term growth and possible electric vehicle sector domination. However, long-term perspectives align with past Morgan Stanley outlooks that hint toward Tesla’s decline and subsequent inferiority in the Chinese market.
Following the news of Tesla vehicles being banned in military or government facilities late last week, Morgan Stanley released a new note that revealed several important metrics that could be affected by the ban. The firm’s short-term outlook seems bullish, especially as it highlights the advantages Tesla holds financially in China and its popularity with Chinese car buyers, who have flocked to the company’s all-electric vehicles since first being delivered in early 2020.
Tesla and China: 7 Thoughts | Morgan Stanley$TSLA pic.twitter.com/YxuJWFWuWK
— David Tayar (@davidtayar5) March 22, 2021
“We estimate well over 50 to 60% of Tesla’s global profitability is currently derived from China,” Morgan Stanley analysts revealed as the first of seven points in the note. Giga Shanghai, Tesla’s Chinese production facility, is currently producing 450,000 vehicles annually, the company said in its most recent Shareholder Deck. While some of those vehicles are being exported to Europe to help supplement the Fremont factory’s production, most of them stay in China to help feed the overwhelming demand that has been sustained through consumer loyalty. Tesla has done a great job of expediting production timeframes to keep up with healthy demand. It surely is helping fuel the company’s profitability, which has spanned through the six previous quarters.
Additionally, Morgan Stanley stated that it “believes automobiles will transform into a transportation utility, where companies will fight for a winner-take-most network at a regional/national level.”
With Tesla dominating 2020 EV sales in China, mostly in part to the Model 3 that held 11% of the total market share, the company sits in a prime position to dominate the market for years to come. While the Wuling HongGuang Mini EV has outsold the Model 3 for several months, it isn’t easy to compare the two vehicles. Price, range, performance, and luxury are all incomparable because the Model 3 dominates nearly every category except for the price. While the HongGuang Mini EV is more affordable because it is only $4,500, it is undoubtedly a budget vehicle. It has just over 100 miles of range, and standard features, like air conditioning, will run consumers an extra $500.
While some of Morgan Stanley’s new note gave off bullish tones, several points came off bearish, especially one point that seemed to align with analyst Adam Jonas’ prediction that Tesla would not sell a car in China by 2030.
“We forecast Tesla China volume peaking in the year 2027 at just under 900k units and declining from there,” the note said. “Beyond 2030, our implied growth rate and terminal valuation of Tesla’s China business includes a significantly diminished contribution from China.”
In October 2020, Jonas said that Tesla’s raging success in China would come to an end. “We have China sales peaking [in the] middle of the decade and then going down…and then eventually nothing after 2030,” Jonas said to Yahoo Finance. Interestingly, Jonas’s prediction was mostly based on the fact that the U.S. government would likely not want Chinese autonomous vehicles traveling around the country. This situation is extremely similar to the ban China put on Tesla vehicles entering military and government-owned facilities last week.
Tesla to sell zero cars in China by 2030, Morgan Stanley’s Jonas says
“Can you imagine a Chinese internet of cars autonomous network operating in the streets of Boston in 10 years? Of course not. Wake up. It’s not happening,” Jonas added. “And so this idea that the Chinese aren’t allowed to use AI network machine learning data privacy networks from the state, but it’s okay for us to do [it] there, is just a fallacy in our opinion.”
It seems like a longshot that Tesla will simply dissolve into nothing in China by 2030. However, Jonas believes that rising tensions between the U.S. and China could point toward privacy taking priority, and autonomous vehicles will raise suspicion that they could be used as spy devices. If this were to happen in 9 years, Tesla would lose a considerable chunk of its profitability because of China’s influence on the company’s financials. However, this remains to be seen, and many Tesla bulls believe that the company holds a long future in China that could spell trouble for competing automakers for years to come.
Disclosure: Joey Klender is a TSLA Shareholder.
Elon Musk
Tesla stock gets latest synopsis from Jim Cramer: ‘It’s actually a robotics company’
“Turns out it’s actually a robotics and Cybercab company, and I want to buy, buy, buy. Yes, Tesla’s the paper that turned into scissors in one session,” Cramer said.
Tesla stock (NASDAQ: TSLA) got its latest synopsis from Wall Street analyst Jim Cramer, who finally realized something that many fans of the company have known all along: it’s not a car company. Instead, it’s a robotics company.
In a recent note that was released after Tesla reported Earnings in late January, Cramer seemed to recognize that the underwhelming financials and overall performance of the automotive division were not representative of the current state of affairs.
Instead, we’re seeing a company transition itself away from its early identity, essentially evolving like a caterpillar into a butterfly.
The narrative of the Earnings Call was simple: We’re not a car company, at least not from a birds-eye view. We’re an AI and Robotics company, and we are transitioning to this quicker than most people realize.
Tesla stock gets another analysis from Jim Cramer, and investors will like it
Tesla’s Q4 Earnings Call featured plenty of analysis from CEO Elon Musk and others, and some of the more minor details of the call were even indicative of a company that is moving toward AI instead of its cars. For example, the Model S and Model X will be no more after Q2, as Musk said that they serve relatively no purpose for the future.
Instead, Tesla is shifting its focus to the vehicles catered for autonomy and its Robotaxi and self-driving efforts.
Cramer recognizes this:
“…we got results from Tesla, which actually beat numbers, but nobody cares about the numbers here, as electric vehicles are the past. And according to CEO Elon Musk, the future of this company comes down to Cybercabs and humanoid robots. Stock fell more than 3% the next day. That may be because their capital expenditures budget was higher than expected, or maybe people wanted more details from the new businesses. At this point, I think Musk acolytes might be more excited about SpaceX, which is planning to come public later this year.”
He continued, highlighting the company’s true transition away from vehicles to its Cybercab, Optimus, and AI ambitions:
“I know it’s hard to believe how quickly this market can change its attitude. Last night, I heard a disastrous car company speak. Turns out it’s actually a robotics and Cybercab company, and I want to buy, buy, buy. Yes, Tesla’s the paper that turned into scissors in one session. I didn’t like it as a car company. Boy, I love it as a Cybercab and humanoid robot juggernaut. Call me a buyer and give me five robots while I’m at it.”
Cramer’s narrative seems to fit that of the most bullish Tesla investors. Anyone who is labeled a “permabull” has been echoing a similar sentiment over the past several years: Tesla is not a car company any longer.
Instead, the true focus is on the future and the potential that AI and Robotics bring to the company. It is truly difficult to put Tesla shares in the same group as companies like Ford, General Motors, and others.
Tesla shares are down less than half a percent at the time of publishing, trading at $423.69.
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.
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