Morgan Stanley has once again given an overweight rating to Tesla stock. In addition, Morgan Stanley has also set a price target of $250 for Tesla (TSLA). This comes at a time when the global EV market is transitioning away from a state of undersupply towards oversupply.
According to the analysts of Morgan Stanley, the year 2023 will be an important one for the EV market. In 2023, the execution of the supply chain management and the manufacturing costs will reveal the true winner of this market.
They also stressed how electric vehicle manufacturers need to work towards bringing down the costs of electric vehicles. This will help electric cars to penetrate the consumer market and even to compete against non-electric vehicles.
For now, the rate of EV penetration is facing problems due to a host of problems. For starters, we have started to see the cost of diversification become more clear. Similarly, the supply chain of the EV market was heavily dominated by China. And in 2022, we have seen how this dependence has revealed cracks in this business model.
Considering the whole situation, Morgan Stanley believes that the company which can lead the front is Tesla. According to them, Tesla has what's needed for cost improvements and to lead new engineering initiatives in the EV market.
But for the near term, the chances of deflation in the EV sector are very highly likely, according to Morgan Stanley. So based on that, the investors must brace for a margin reset in the EV sector & a downtrend in the concerned stocks.
Although Morgan Stanley is bullish on Tesla, let's not forget the performance of this EV stock in 2022. With the adventures of Elon Musk and a general downtrend in global stocks, a major chunk of Tesla's market cap was removed.
And for 2023, there are talks that a recession could hit major economies around the world. If this happens, it could also affect consumer spending on things such as electric cars when non-electric cars are much cheaper.