Morgan Stanley: Is eVTOL Tesla's Next Frontier?

Morgan Stanley analysts, led by Adam Jonas, are suggesting that Tesla's next frontier could be the electric Vertical Take-Off and Landing (eVTOL) industry, despite Elon Musk's current focus on other ventures. This comes as Tesla's stock continues to perform strongly, with a nearly 20 percent increase in the past month.

Tesla's Potential Leap Into eVTOL

Morgan Stanley's Adam Jonas has raised the intriguing possibility of Tesla entering the eVTOL (electric Vertical Take-Off and Landing) sector. While Elon Musk has previously indicated that Tesla is "stretched pretty thin" when questioned about developing aircraft, Jonas interprets Musk's response as not a definitive denial, but rather an open-ended possibility. This perspective suggests that Tesla, known for disrupting various industries, might consider aviation as its next challenge.

• Musk's response to aviation questions was not a categorical denial.

• Jonas questions if Tesla is an "aviation/defense-tech company in auto/consumer clothing.

• Musk's current focus remains on vehicle autonomy, AI, and robotics.

Tesla's Strategic Importance and Robotics Ambitions

Beyond the potential for eVTOL, Morgan Stanley's note also highlights Tesla's critical role in the U.S. economy, particularly in its competition with China. Jonas emphasizes Tesla's expertise in manufacturing, data collection, robotics, AI, energy, supply chain, and infrastructure as vital for the U.S. to maintain parity with China in "embodied AI."

• Tesla's capabilities are crucial for the U.S. to compete with China in advanced AI.

• China's advancements in robotics, including robots running half marathons, are noted.

• Jonas envisions a U.S. equivalent to China's robotic showcases, potentially dubbed "Humanoid Ninja Warrior," with Tesla at the forefront.

The Race for Affordable EVs and Pricing Strategies

The discussion also touched upon the highly anticipated release of Tesla's more affordable models. These models are expected to launch before the end of Q2, with pricing details still pending. The potential disappearance of the $7,500 tax credit by the end of 2024 adds complexity to the pricing strategy, especially when compared to aggressive pricing models seen in China, such as the BYD Seagull, priced around $8,000.

• Tesla aims to launch affordable models by the end of Q2.

• The $7,500 tax credit's future is uncertain, impacting final pricing.

• Elon Musk has indicated a target price of around $30,000 with incentives for the affordable models.