- Shift to Regional Protectionism in the EV Sector
- Morgan Stanley's Role in Changing Tesla’s Strategy
- Long-term Growth Questions for Tesla
In recent months, it has become clear that the electric vehicle industry is transitioning from heavy government subsidies to greater emphasis on regional protectionism. This trend significantly impacts key market players, including Tesla.
Shift to Regional Protectionism in the EV Sector
In July, the EU ramped up its eurozone protection by imposing tariffs on Chinese companies BYD, Geely, and state-owned SAIC, which collaborates with Baidu to develop its Apollo Go robotaxi service. At the same time, the European Commission slashed tariffs on China-built Tesla EVs. Recently, Canada announced a 100% tariff on China-made EVs, in addition to a 25% tariff on aluminum and steel exports.
Morgan Stanley's Role in Changing Tesla’s Strategy
Morgan Stanley reduced its TSLA exposure in November 2023, coinciding with a steady decline in Tesla’s share price. This decision was influenced by a downturn in the auto industry and increased competition among EV manufacturers like BYD with its Seagull model. Nevertheless, Morgan Stanley still sees Tesla as a growth stock, especially in AI, energy storage, and robotics, though it favors less risky assets like Spotify.
Long-term Growth Questions for Tesla
Ross Gerber, co-founder and CEO of Gerber Kawasaki Wealth and Investment Management, emphasizes that Tesla should focus on selling EVs rather than vague robotics and self-driving projects. Tesla EVs are known to lose value quicker than other luxury vehicles. However, should Tesla succeed in developing robotaxi services, its stock could see significant growth by 2029.
Tesla faces substantial challenges amid changing market conditions and increased competition. For successful growth, the company must not only scale EV sales but also effectively implement new AI and robotics projects.
Comments