Tesla jumps on replacing Ford as Morgan Stanley's 'top pick' in US auto sector

US Automotive Manufacturing

29/07/2024 16:33

July 29 (Reuters) - Tesla  TSLA.O  shares jumped nearly
6% on Monday after Morgan Stanley named the most valuable
automaker its "top pick" in the U.S. automotive industry,
replacing Ford  F.N .
    The brokerage said Tesla's energy business could potentially
grow to be worth more than the company's auto business in the
future, as investors were likely to focus on firms that address
climate change-related issues.
    It also expects Tesla to take a more dominant position in
the market for zero-emission vehicle credit revenue - for which
it recognized around $2,000 per unit in the second quarter - as
legacy automakers pull back on their EV expansion plans. 
    "We estimate Tesla may account for as much as half the
credit sales in the market, supporting a 100% margin business
for Tesla that may not be anticipated by the investment
community at this time," Morgan Stanley analysts said. 
    Tesla, however, reported its lowest profit margin in more
than five years last week and missed Wall Street earnings
targets for the second quarter, as the Elon Musk-led firm
heavily discounted its vehicles to counter sagging demand.
    The brokerage flagged concerns over Tesla's ability to
commercialize autonomous driving technology in China and the
future of EV demand.
    Tesla has been betting on its autonomous driving technology,
which has come under regulatory scrutiny over safety concerns.  
    Investors are keenly awaiting Tesla's robotaxi launch event,
which it had delayed to October from August to rework some
elements of the car.  
     

 (Reporting by Zaheer Kachwala in Bengaluru; Editing by Anil
D'Silva)
 ((Zaheer.Kachwala@thomsonreuters.com;))