Morgan Stanley believes Tesla shares have significant upside as the company rolls out a fleet of autonomous cars, or robotaxis, that run on artificial intelligence. Analyst Adam Jonas on Monday increased his stock price target for Tesla to $430 per share as a base case, suggesting about 9% upside from current levels. The firm also sees a bull case in which Tesla’s stock could ultimately double to $800 per share. Tesla’s leadership position in semi-autonomous electric robots could allow the company to convert car owners into subscribers “generating highly recurring (and high margin) revenue,” Jonas said. The investment bank’s base case sees Tesla deploying 7.5 million autonomous vehicles by 2040. The bull case sees the company rolling out 12 million such vehicles vehicles in the same time frame. “Our Bull Case comes into play in situations of international expansion (potentially into Europe) and greater pricing power/fewer competitors,” Jonas said. The investment bank also warned of a possible bear case where Tesla deploys 3.5 million autonomous vehicles by 2040. “We envision our Bear Case reflecting headwinds from a combination of tighter regulations, slower geographic expansion, and tougher competitive dynamics,” Jonas said. Jonas’ call comes as tech stocks have struggled to find solid footing in the new year. Tesla shares were down 1% in trading on Monday, and have fallen more than 3% year to date. The group has been hurt by a rise in bond yields, with the 10-year Treasury yield on Monday touching its highest level since late 2023. These higher yields, and possibility that the Federal Reserve could slow its rate cutting plans, means the cost of capital could remain high this year, which would likely weaken investment as well as consumer spending.
