The real value in Tesla lies in its robotics ambitions, according to Morgan Stanley. Analyst Adam Jonas named Tesla his new top pick in U.S. autos, highlighting the embattled electric vehicle maker’s opportunity in autonomy and robotics as the catalyst for its growth moving forward — rather than its cars. He has an overweight rating on the stock, and his $430 price target implies about 46.8% potential upside for Tesla shares. “TSLA FY25 deliveries could potentially decline YoY, creating an attractive entry point to our preferred embodied AI name,” Jonas said in a Sunday note to clients. “Tesla’s YTD auto deliveries have been mostly below expectations, but not particularly narrative changing. Tesla’s softer auto deliveries are emblematic of a company in the transition from an automotive ‘pure play’ to a highly diversified play on AI and robotics.” Humanoid robots are still not in the firm’s base or bull case for Tesla stock, even though Jonas believes that they hold a potential multidecade, trillion-dollar opportunity largely and that the adoption curve of “non-auto expressions of embodied AI” (such as humanoids) could accelerate faster than that for autonomous cars. But humanoids are now “becoming serious enough to move the stock,” Jonas said in the note, adding that every 1% of the U.S. labor force that can be captured by Tesla’s Optimus robot is worth about $100 per Tesla share. “While autos still matter, we see embodied AI as the driver for upside to our $800 bull case,” he continued, citing a target suggests shares could see a whopping 173% potential gain. Jonas’ upgrade comes after a tough run for Tesla shares, which have plunged more than 27% this year and largely given up their election gains as CEO Elon Musk’s political behaviors have driven investors away and angered consumers. Tesla sales across Europe fell 45% last month, while rival electric vehicle makers saw a spike in demand, adding further concern to the stock’s growth story. Tesla’s shares are up roughly 44.5% over the past year. TSLA 1Y mountain Tesla stock performance. Beyond in robotics and autonomous technologies, Jonas expects Tesla to see further growth in its energy storage portfolio. “We believe 2025 will be a year where investors will continue to appreciate and value these existing and nascent industries of embodied AI where we believe Tesla has established a material competitive advantage,” he added. Tesla shares popped 2% after Jonas’ call. Overall, analysts are split on the automaker. LSEG data shows 24 of 53 analysts have a buy or strong buy rating. However, another 17 rate it a hold, while 12 have an underperform or sell rating.
