Market Overview

Morgan Stanley On Michigan's Tesla Ban: It's Only A Matter Of Time Before Something Gives

Share:
Morgan Stanley On Michigan's Tesla Ban: It's Only A Matter Of Time Before Something Gives
Related TSLA
Barron's Ponders The Future Of Ford
The Story Of Lockheed Martin And The $4 Billion Tweet
Stocks Pause Ahead Of 3-Day Weekend; Costco, Veeva Jump (Investor's Business Daily)

Morgan Stanley issued a note Wednesday on Michigan Governor Rick Snyder signing a bill to prevent Tesla Motors Inc (NASDAQ: TSLA) from operating its own stores in the state.

Analysts led by Adam Jonas noted that while Ford Motor Company (NYSE: F) and General Motors Company (NYSE: GM) publicly favor maintaining the existing dealer franchise laws, the system is antiquated and makes "it harder for GM and F to provide best execution for their customers."

"Tesla is the only OEM that can truly control the customer experience at many of its stores, while the rest are prevented by law. We see this is a major advantage for TSLA and a disadvantage for all others," according to the note.

Jonas added that "Tesla's quest to own its stores has brought to light issues that have long faced the industry. As TSLA grows in significance and expands its sales network, we expect more debate (at the Federal level) on the double standard in the application of dealer franchise laws."

The note indicated that over the long term, OEM-owned stores may be in the best interests of manufacturers, dealers and customers.

Jonas believed "it's only a matter of time before something gives. We expect that in the next 2 to 3 years, this could very likely mushroom into a national issue. We believe these laws exist to support the weakest link in the network. Stronger, better capitalized dealers should thrive with freer competition."

Tesla Motors Inc traded at $233.51 in the premarket, down 0.78 percent.

Latest Ratings for TSLA

DateFirmActionFromTo
May 2017Morgan StanleyDowngradesOverweightEqual-Weight
May 2017Evercore ISI GroupReinstatesOutperformOutperform
Apr 2017PiperJaffrayUpgradesNeutralOverweight

View More Analyst Ratings for TSLA
View the Latest Analyst Ratings

Posted-In: Adam Jonas michigan Morgan Stanley Rick SnyderAnalyst Color News Analyst Ratings Best of Benzinga

 

Related Articles (F + GM)

View Comments and Join the Discussion!