Tesla (NASDAQ: TSLA) has enjoyed raging success in the Chinese automotive market so far in 2020. The company is in control of 21% of the total electric vehicle market, according to Nikkei Asia. However, the company’s domination could be short-lived, according to Morgan Stanley’s Adam Jonas, who believes that Tesla will reach the end of its road in China by 2030.
“We have China sales peaking [in the] middle of the decade and then going down…and then eventually nothing after 2030,” Jonas said to On the Move, a Yahoo Finance show, earlier this week.
Interestingly, Jonas’ analysis of Tesla’s future potential in the market does not come down to competition in China or the automaker falling apart altogether. It comes down to the United States’ relationship with China.
Jonas believes that data privacy and security, especially of high-level tech companies in the United States and China, would not be allowed to enter opposing territories. With Tesla’s software being the most sophisticated on the planet in terms of self-driving and semi-autonomy, the company would likely not be allowed to have any cars traveling around China.
“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.”
However, Tesla not selling a single vehicle because of this possible roadblock seems like a longshot. While there may be some issues with Tesla’s software and autonomy operating in China, there is little chance that the company’s electric vehicles aren’t being sold anyway.
If Tesla were to not have their semi-autonomous technology and industry-leading Full Self-Driving suite, the company still has a significant lead in terms of EV tech, battery longevity and quality, and EV performance.
While 2030 is still ten years away, there is a chance that Tesla will still be the leader in all of these categories. Considering the company has a multi-year lead in EV development, there it is plenty of reasons to believe that Tesla will be the overwhelming leader in the sector for many years to come.
Jonas has a 51% success rate and an average return of 7.9%, according to TipRanks.com. He has a $272.00 price target on TSLA stock and currently maintains a “Hold” rating.
Disclaimer: Joey Klender is a TSLA shareholder.