Tesla's Future: Morgan Stanley's Adam Jonas Foresees Car, Smartphone Convergence

Morgan Stanley analyst Adam Jonas sees the lines between the automobile and mobile device market blur away as cars become increasingly defined by their software. This, he believes, will have implications for EV giant Tesla Inc TSLA.

Positive Outlook: Jonas has maintained an "overweight" rating on Tesla stock with a price target of $400.

The Tesla Thesis: Jonas believes it’s not too early for Tesla investors to consider the implications of the blurring lines between the two market segments of automobiles and mobile devices.

The vehicle is now increasingly defined by its software and the key attributes of the connected vehicle include the primary hardware of a smartphone be it battery, screen, camera, modem, antenna etc. This primary hardware is then wrapped with additional features such as electric motors, crash safety systems, etc., Jonas said.

With Chinese automaker Nio recently launching a smartphone designed for specific use with its EVs and Tesla users increasingly using their phones as their primary key, this merging of the two segments is getting more absolute, he added.

Jonas says that his forecasts for Tesla are dependent on the EV giant expanding beyond the sale of just a certain number of cars. “The ultimate destination of the future of mobility will be anything but ordinary,” Jonas wrote.

Why It Matters: As noted by Jonas, Tesla vehicles have often been described as iPhones on wheels. While the smartphone maker had revealed its intent of making a car previously, so had Tesla of making a phone.

While rumors of Tesla's own smartphone project have circulated for some time, concrete developments remain elusive. Elon Musk, Tesla's CEO, had briefly mentioned creating an "alternative phone" last year after acquiring Twitter (now called X), after the microblogging site's uncertain status on mainstream app stores.

Whether Musk’s plans to turn X into a super app requires the development of hardware outside the car is ‘difficult’ to answer, Jonas added.

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