

Investor's Corner
Morgan Stanley outlines Tesla’s 8 key drivers for further expansion
Recently, Morgan Stanley (MS) released a note on Tesla’s future capacity expansion. The note discussed key drivers that would push Tesla’s growth further in terms of model/segment and factory footprint. Each driver is discussed below.
Produce in markets where they want to sell & diversify outside China
“Cars don’t ship like iPhones, and there are benefits in high localization,” wrote the Morgan Stanley analysts. The investment bank expects “to see significant diversification going forward.”
Gigafactory Shanghai has proven to be an excellent move for Tesla. Tesla China has significantly contributed to the company’s growth since the Shanghai factory started operations. Giga Berlin and Giga Texas are poised to have the same impact when they are operational.
Make each new factory its ‘best’ factory
The Morgan Stanley note stated that there may be room to improve Tesla’s factories, specifically design, cost, and automation.
Tesla always strives to improve and be more efficient. The company’s constant push to improve can be seen in the slight differences and improvements in each Gigafactory. For example, Tesla Giga Shanghai’s layout and design seem based on the GA4 tent the company built when the company was ramping Model 3 production.
Giga Berlin seems to follow the same design, but Tesla has invested in some impressive machines for production in Europe. For instance, Elon Musk has talked about Giga Berlin’s paint shop for quite some time, describing it as one of the most advanced paint shops in the world.
Then there is Giga Texas, which will be Tesla’s Cybertruck factory. The Cybertruck’s unique stainless steel exoskeleton would probably introduce some tough production challenges that would undoubtedly bring about solutions in ways only Tesla could solve.
Spread bets across national regimes
Morgan Stanley writes that “the industry has learned some recent valuable lessons on overdependence on concentrated/extended supply chains.”
In the last earnings call, Elon Musk shared that Tesla faced some supply chain challenges in the first quarter, which the team handled well. Some rumors suggest that Tesla may be interested in investing in its own factory for chips to avoid similar supply chain challenges in the future. Tesla also stepped forward to help a global shipping company with its vast amounts of shipping data, hinting that Tesla is learning more about supply chain processes.
Tesla’s drivers for technological growth
Morgan Stanley lists two drivers related to Tesla tech that could help the company’s expansion. One tech-related driver states Tesla should set technology standards in major regions by getting there first.
The second driver related to tech states that battery economics drive expansion. “We believe battery vertical integration co-located with final assembly ideally suited to volume of 500k to 1mm units per plant,” noted the Wall Street firm.
Drivers for Tesla’s global market expansion
In its note, Morgan Stanley wrote that Tesla should aggressively reduce prices to prevent/delay encroachment from big tech. The note specifically mentions the Apple Car, calling it the “stalking horse.” Granted, Apple might be able to develop software for vehicles that is much better than software found in the cars of Tesla competitors. However, mass-producing a vehicle would be a challenge for a tech company like Apple with no car production experience.
The Wall Street firm also lists that Tesla partnerships could be a natural outcrop of the company’s global/scaled strategy. “We see scope for Tesla to work with other OEMs (both legacy and startups) in areas such as batteries, full EV skateboards, OS, and other products and services.
Tesla and Elon Musk have always been open to working with other automakers to drive its main goal forward: to expedite the move towards a solar electric economy.
The Teslarati team would appreciate hearing from you. If you have any tips, email us at tips@teslarati.com or reach out to me at maria@teslarati.com.
Elon Musk
Tesla blacklisted by Swedish pension fund AP7 as it sells entire stake
A Swedish pension fund is offloading its Tesla holdings for good.

Tesla shares have been blacklisted by the Swedish pension fund AP7, who said earlier today that it has “verified violations of labor rights in the United States” by the automaker.
The fund ended up selling its entire stake, which was worth around $1.36 billion when it liquidated its holdings in late May. Reuters first reported on AP7’s move.
Other pension and retirement funds have relinquished some of their Tesla holdings due to CEO Elon Musk’s involvement in politics, among other reasons, and although the company’s stock has been a great contributor to growth for many funds over the past decade, these managers are not willing to see past the CEO’s right to free speech.
However, AP7 says the move is related not to Musk’s involvement in government nor his political stances. Instead, the fund said it verified several labor rights violations in the U.S.:
“AP7 has decided to blacklist Tesla due to verified violations of labor rights in the United States. Despite several years of dialogue with Tesla, including shareholder proposals in collaboration with other investors, the company has not taken sufficient measures to address the issues.”
Tesla made up about 1 percent of the AP7 Equity Fund, according to a spokesperson. This equated to roughly 13 billion crowns, but the fund’s total assets were about 1,181 billion crowns at the end of May when the Tesla stake was sold off.
Tesla has had its share of labor lawsuits over the past few years, just as any large company deals with at some point or another. There have been claims of restrictions against labor union supporters, including one that Tesla was favored by judges, as they did not want pro-union clothing in the factory. Tesla argued that loose-fitting clothing presented a safety hazard, and the courts agreed.

(Photo: Tesla)
There have also been claims of racism at the Fremont Factory by a former elevator contractor named Owen Diaz. He was awarded a substantial sum of $137m. However, U.S. District Judge William Orrick ruled the $137 million award was excessive, reducing it to $15 million. Diaz rejected this sum.
Another jury awarded Diaz $3.2 million. Diaz’s legal team said this payout was inadequate. He and Tesla ultimately settled for an undisclosed amount.
AP7 did not list any of the current labor violations that it cited as its reason for
Investor's Corner
xAI targets $5 billion debt offering to fuel company goals
Elon Musk’s xAI is targeting a $5B debt raise, led by Morgan Stanley, to scale its artificial intelligence efforts.

xAI’s $5 billion debt offering, marketed by Morgan Stanley, underscores Elon Musk’s ambitious plans to expand the artificial intelligence venture. The xAI package comprises bonds and two loans, highlighting the company’s strategic push to fuel its artificial intelligence development.
Last week, Morgan Stanley began pitching a floating-rate term loan B at 97 cents on the dollar with a variable interest rate of 700 basis points over the SOFR benchmark, one source said. A second option offers a fixed-rate loan and bonds at 12%, with terms contingent on investor appetite. This “best efforts” transaction, where the debt size hinges on demand, reflects cautious lending in an uncertain economic climate.
According to Reuters sources, Morgan Stanley will not guarantee the issue volume or commit its own capital in the xAI deal, marking a shift from past commitments. The change in approach stems from lessons learned during Musk’s 2022 X acquisition when Morgan Stanley and six other banks held $13 billion in debt for over two years.
Morgan Stanley and the six other banks backing Musk’s X acquisition could only dispose of that debt earlier this year. They capitalized on X’s improved operating performance over the previous two quarters as traffic on the platform increased engagement around the U.S. presidential elections. This time, Morgan Stanley’s prudent strategy mitigates similar risks.
Beyond debt, xAI is in talks to raise $20 billion in equity, potentially valuing the company between $120 billion and $200 billion, sources said. In April, Musk hinted at a significant valuation adjustment for xAI, stating he was looking to put a “proper value” on xAI during an investor call.
As xAI pursues this $5 billion debt offering, its financial strategy positions it to lead the AI revolution, blending innovation with market opportunity.
Elon Musk
Tesla tops Cathie Wood’s stock picks, predicts $2,600 surge
Tesla’s future lies beyond cars—with robotaxis, humanoid bots & AI-driven factories. Cathie Wood predicts a 9x surge in 5 years.

Cathie Wood shared that Tesla is her top stock pick. During Steven Bartlett’s podcast “The Diary Of A CEO,” the Ark Invest founder highlighted Tesla’s innovative edge, citing its convergence of robotics, energy storage, and AI.
“Because think about it. It is a convergence among three of our major platforms. So, robots, energy storage, AI,” Wood said of Tesla. She emphasized the company’s potential beyond its current offerings, particularly with its Optimus robots.
“And it’s not stopping with robotaxis; there’s a story beyond that with humanoid robots, and our $2,600 number has nothing for humanoid robots. We just thought it’d be an investment, period,” she added.
In June 2024, Ark Invest issued a $2,600 price target for Tesla, which Wood reaffirmed in a March Bloomberg interview, projecting the stock to reach this level within five years. She told Bartlett that Tesla’s Optimus robots would drive productivity gains and create new revenue streams.
Elon Musk echoed Wood’s optimism in a CNBC interview last month.
“We expect to have thousands of Optimus robots working in Tesla factories by the end of this year, beginning this fall. And we expect to scale Optimus up faster than any product, I think, in history to get to millions of units per year as soon as possible,” Musk said.
Tesla’s stock has faced volatility lately, hitting a peak closing price of $479 in December after President Donald Trump’s election win. However, Musk’s involvement with the White House DOGE office triggered protests and boycotts, contributing to a stock decline of over 40% from mid-December highs by March.
The volatility in Tesla stock alarmed investors, who urged Musk to refocus on the company. In a May earnings call, Musk responded, stating he would be “scaling down his involvement with DOGE to focus on Tesla.” Through it all, Cathie Wood and Ark Invest maintained their faith in Tesla. Wood, in particular, predicted that the “brand damage” Tesla experienced earlier this year would not be long term.
Despite recent fluctuations, Wood’s confidence in Tesla underscores its potential to redefine industries through AI and robotics. As Musk shifts his focus back to Tesla, the company’s advancements in Optimus and other innovations could drive it toward Wood’s ambitious $2,600 target, positioning Tesla as a leader in the evolving tech landscape.
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