Morgan Stanley’s Adam Jonas: “We Have Conducted The Most Extensive Re-Architecture And Expansion Of Our Tesla Mobility (Robotaxi) Model Since Its Initial Publication In 2015”

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Tesla has been attracting quite a lot of eyeballs on Wall Street lately, not because its core auto business is doing particularly well, but due to its renewed focus on autonomous vehicles (AVs) and humanoid robots, thereby unlocking a substantially higher Total Addressable Market (TAM) and driving a litany of stock price upgrades in the process.

Today, it is the turn of Morgan Stanley's Adam Jonas - an avowed Tesla permabull - to delineate his bullish case for the high-flying stock.

Morgan Stanley Raises $TSLA PT to $430 from $400 - Overweight

Analyst comments: "As interest in autonomous vehicles (AVs) continues to rise, we have conducted the most extensive re-architecture and expansion of our Tesla Mobility (robotaxi) model since its initial publication in…

— Wall St Engine (@wallstengine) January 13, 2025

At the outset, Jonas declares that his latest Tesla investment note is a product of "the most extensive re-architecture and expansion of our Tesla Mobility (robotaxi) model since its initial publication in 2015."

While conceding that Tesla's core auto business continues to face "well-known challenges in the FY25 EV market," Jonas anchors his $800 bull case stock price target for the EV giant on "embodied AI as the key driver for upside."

As a refresher, Tesla's EV business continues to contend with expansive headwinds, albeit ones that are somewhat waning. While the EV giant tried to combat anemic demand - which itself is a function of fierce new competition out of China - for its aging product lineup through much of 2023 and 2024 by instituting price cuts and offering incentivized financing, it has recently introduced refreshed versions of Model 3 and Model Y (Juniper), and is rumored to be working on an affordable hatchback model (Model Q) to combat persistent demand-related malaise.

Coming back, Jonas notes that much of the recent appreciation in Tesla's share price "reflects its expanding leadership in physical AI, leveraging natural advantages in data collection, robotics, energy storage, AI/compute, manufacturing, and infrastructure," and compounded by "synergies across Elon Musk's companies, such as SpaceX and xAI."

Jonas then delivers the following punchline:

"We see 2025 as a year where Tesla's unique skillset could be further reflected in its valuation, despite well-known challenges in the FY25 EV market."

Beyond 2025, the Morgan Stanley analyst expects "Tesla's total addressable market (TAM) to expand into broader domains, many of which are still not reflected in current financial models."

Bear in mind that Elon Musk appears to be increasingly banking on the EV giant's FSD capabilities and the Optimus humanoid robot to drive the narrative around Tesla shares.

For instance, Musk has already announced that the "completely autonomous," unsupervised version of the FSD will roll out later this year, with the much-anticipated Cybercab officially launching in 2026. The recently launched, much-improved version 13 of the FSD has played an important role in bolstering the market's confidence in this projected timeline. Concurrently, the CEO of Tesla continues to hype up the Optimus humanoid robot, recently going so far as to declare that Tesla was aiming to produce between 50,000 and 100,000 units of the Optimus robot in 2026 "and then 10x it again the following year.

In light of Tesla's "embodied AI" moves, Morgan Stanley has raised its price target for the stock from $400 to $430. The Wall Street titan's bull case target for the stock is now anchored at the nosebleed $800 price level.

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