Tesla Still a Long-Term Winner, Says Morgan Stanley Despite Political Drama

Morgan Stanley has reiterated its Overweight rating on Tesla Inc (NASDAQ:TSLA), setting a price target of $410, signaling nearly 39% upside from last week's close—even as the EV giant weathers political storms and consumer backlash.

Political Feud vs. Long-Term Fundamentals

Tesla stock tumbled 15% last week after CEO Elon Musk's public feud with President Donald Trump escalated on social media. Despite Musk's exit from his White House advisory role in late May and criticism of Trump's new tax bill, Morgan Stanley sees no structural change to Tesla's growth trajectory.

What's Driving the Reaffirmation?

Morgan Stanley analysts emphasized:

• Phasing out of EV tax credits in Trump's “big beautiful” tax bill is not material to Tesla's long-term outlook.

• Tesla's AI and robotics innovation still positions it ahead of legacy automakers and newer EV players.

• The firm acknowledges potential short-term demand risks, with political polarization possibly alienating some consumers.

• Yet, they argue Tesla's core value drivers remain intact.

Beyond the Headlines: Tesla's Deep Bench Strength

Despite falling sales and rising competition from Chinese EV makers like BYD, Morgan Stanley believes Tesla's edge lies in:

• Autonomous driving leadership

• Manufacturing and supply chain re-engineering

• Energy infrastructure and renewable power

• AI and robotics integration

"While emotions are running high, we are not convinced the longer-term vectors that drive the stock's value have changed here," the analysts wrote.

Tesla's AI Bet: Still Central to the Bull Thesis

Elon Musk has doubled down on Tesla's role as more than just an EV maker. With Tesla expanding its focus on self-driving technology, humanoid robots, and vertical AI integration, investors are being encouraged to look beyond quarterly noise and political theatrics.

Final Takeaway

Even amid political turbulence and fading tax benefits, Morgan Stanley remains bullish on Tesla's innovation pipeline. For long-term investors, the stock's current dip may represent a strategic entry point rather than a red flag.

Track Tesla's evolving innovation strategy using the Company Rating and analyze its R&D-driven transformation via the Key Metrics (TTM).