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Morgan Stanley analysts warn that investors should prepare for a shift in Tesla’s (NASDAQ:) focus beyond just electric vehicles (EVs).
Analysts believe that the upcoming Master Plan 4 (MP4) will reveal a strategic pivot towards “Anything But Cars” (ABC).
“Elon Musk appears to have acknowledged that China may have won the battle for affordable conventional electric vehicles,” the Morgan Stanley note said. This suggests a possible de-focus on Tesla’s core automotive business.
The report highlights Tesla’s growing ambitions in artificial intelligence (AI), robotics, and hybrid computing.
Analysts expect MP4 to display a clearer connection between Tesla and Elon Musk’s other projects such as SpaceX and X, forming a broader technology ecosystem.
Morgan Stanley believes that the automotive sector will become a less important factor in Tesla’s valuation over the next year. They see a combination of a weak electric vehicle market and Tesla’s expansion into new areas like humanoid robotics driving this shift.
While acknowledging the importance of stabilizing the auto business for evaluating Tesla’s AI, Morgan Stanley remains overweight on Tesla with a price target of $310. They see Tesla’s value extending beyond just making cars, allocating just 20% of their price target to the core auto sector.
The report acknowledges that negative developments in the global electric vehicle market may still negatively impact Tesla’s stock price in the near term.
However, analysts are urging investors to consider Tesla’s broader technology play, including areas like the Tesla Network and potential future projects like Optimus robots, which are not currently factored into the price target.
