Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Tesla: Morgan Stanley Cautious Amid 'Near-Term Disruption in China and Slow Ramps in Berlin and Austin'

Published 13/05/2022, 09:04 pm
Updated 13/05/2022, 09:04 pm
© Reuters.

© Reuters.

Morgan Stanley analyst Adam Jonas has reflected on Tesla (NASDAQ:TSLA) and the wider electric vehicle (EV) market amid mounting headwinds.

The analyst notes that the supply chain is under “tremendous stress” as inflation is weighing on demand and capital markets are “less ebullient.”

“Tesla had a strong 1Q, but have investors factored in the Shanghai lockdowns? We’d allow room in the forecasts for near-term disruption in China and slow ramps in Berlin and Austin,” the analyst said in a client note.

He also discussed situations at Rivian (NASDAQ:RIVN) and Lucid (NASDAQ:LCID), which were forced to prioritize cost control over growth. When it comes to Ford (NYSE:F) and General Motors (NYSE:GM), the analyst asks “how can they spend cash they may not have?”

“Where will the battery metal come from? We believe many of the headline-grabbing EV sales targets made by traditional OEMs were made without fully contemplating the availability (and price) of critical battery materials. Material inflation must hit demand at some level. How does a 5x move in Lithium carbonate prices not impact affordability, and ultimately, unit volume?”

While Jonas remains a firm long-term EV bull, he said downside revisions for the adoption through mid-decade are possible. The analyst is especially concerned about the “FY24/25 to FY30 time horizon.”

“While we believe many geopolitical and economic and technological forces will drive higher EV penetration over time, we feel there may be material room to ‘push down the curve’ for the near term to allow for a necessary re-architecture of the supply chain and expansion of capacity to bring EVs to the price point required to fulfill the higher penetration scenarios,” Jonas added in a note.

By Senad Karaahmetovic

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.