Tesla “All-In” on Autonomy as Chinese EV Rivals Surge

From Carmaker to Autonomy Pioneer

Morgan Stanley analysts contend that Tesla (NASDAQ:TSLA) is pivoting from pure EV production toward full self-driving systems, driven by intensifying competition from Chinese automakers. “TSLA is moving away from ‘car' and going all-in on autonomy,” the note states, highlighting that leadership in electric vehicles may now hinge on software and AI rather than hardware alone.

Tesla's shift comes as its forward valuation appears rich relative to fundamentals—a gap you can track via the Ratios (TTM) API, which shows Tesla trading at a premium forward P/E compared to legacy automakers. This premium reflects lofty market expectations for FSD adoption and recurring software revenues beyond one-time vehicle sales.

Chinese EVs: The New Front Line

Morgan Stanley points to Xiaomi's YU7—styled like a Ferrari Purosangue but priced against a Volkswagen—as emblematic of China's rapid EV ascent. Following 120,000 pre-orders for the SU7 in 36 hours, analysts warn that “it may take many years before Ford could beat the SU7 in a street fight.”

Chinese brands are not only undercutting on price but also innovating in in-car software and user experience, forcing Tesla to accelerate its Autonomy Day roadmap. Morgan Stanley predicts that “China may have already won the EV battle. Who can win the autonomy war?”

Valuation and Outlook

Despite the strategic pivot, Morgan Stanley maintains an Overweight rating and a $410 price target on Tesla shares, believing the autonomy story justifies a premium. For a consolidated view of how analysts' targets have trended, tap the Price Target Summary API.

Investors should monitor key milestones—beta FSD rollout metrics, regulatory approvals, and reported daily active users—as these will ultimately determine whether Tesla can sustain its valuation premium in the face of surging, cost-competitive Chinese EVs.