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Tesla Faces China Wipeout By 2030, Morgan Stanley Analyst Says

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Tesla Faces China Wipeout By 2030, Morgan Stanley Analyst Says

Tesla Inc (NASDAQ: TSLA) sales in China, the world’s largest electric vehicle market, may fizzle out by 2030, Morgan Stanley (NYSE: MS) analyst Adam Jonas said in an interview with Yahoo Finance.

What Happened: The Elon Musk-led company may see its sales drop to zero by the end of next decade, Jonas told Yahoo Finance.

“We have China sales peaking [in the] middle of the decade and then going down...and then eventually nothing after 2030,” the analyst said.

“Tesla and other OEMs will have to find a solution outside of China because they won’t be able to compete in the way they are today.”

The analyst theorized that the fall in sales in China would be due to future autonomous vehicle systems and the fragile relationship between the United States and China.

He said just as it was inconceivable that a Chinese internet of cars autonomous network would be allowed to operate in Boston, similarly, the idea a U.S. vehicle network could be placed in China was a “fallacy.”

Why It Matters: Chinese EV manufacturers are already downplaying the impact of Tesla in the domestic market.

Baidu Inc (NASDAQ: BIDU)-backed WM Motor Co’s CEO Freeman Shen likened the  Palo Alto EV maker to Apple Inc (NASDAQ: AAPL) saying “[They] educate the whole market.”

Shen pointed out however that Apple’s market share has been eroded by local players such as Xiaomi Corporation (OTC: XIACF) and Oppo and a similar fate awaits Tesla in the coming decade, Bloomberg reported.

Even Tesla’s $25,000 vehicle to be released in three years' time is not a concern for Chinese manufacturers. 

Xpeng Inc (NASDAQ: XPEV) Vice Chairman Brian Gu said his company’s mid-range vehicles are already at that price point, as per Bloomberg. 

Homegrown EV firms are seeing robust demand as Warren Buffett-backed BYD Auto Co. Ltd, a unit of BYD Company Limited (OTC: BYDDF) said orders for its newly launched “Han” range of vehicles exceeded 40,000 units in just two months of launch since July. 

Price Action: Tesla shares closed nearly 4.5% higher at $448.16 on Thursday and fell 1.2% to $442.80 in the after-hours session.

Latest Ratings for TSLA

DateFirmActionFromTo
Nov 2020WedbushMaintainsNeutral
Nov 2020Morgan StanleyUpgradesEqual-WeightOverweight
Nov 2020B of A SecuritiesMaintainsNeutral

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