Tesla A Decade Away From Hitting Full EV Autonomy, China Future Uncertain, Says Morgan Stanley Analyst

Tesla Inc TSLA is over a decade away from achieving full autonomy at scale for its electric vehicles and its long-term future in China is uncertain, according to Morgan Stanley.

The Tesla Analyst: Morgan Stanley analyst Adam Jonas has maintained an ‘overweight’ rating and a $1,300 price target on the Elon Musk-led company’s shares.

The Tesla Thesis: Jonas said he believes any expectations around Tesla’s full self-driving (FSD) technology majorly boosting margins are overestimated. 

“We believe expectations of FSD flipping into a major near-term margin boost are overestimated,” Jonas wrote in a note shared on Twitter.

“In fact, we believe L4/L5 autonomy at scale is well over a decade away.” 

Jonas now estimates Tesla’s FY 2022 volume to be 1.43 million, below the 1.46 million it expected earlier. 

He also cut FY 2022 gross margins expectations to 26.8% from 28.1%, excluding regulatory credits, taking into account the inflationary pressure the rest of the year.

Jonas said he expects price hikes from Tesla’s battery-cell suppliers that were not fully reflected in the first-quarter results.

Musk recently said he believes the electric vehicle maker is likely to actualize the FSD Level 4 system — which requires no human intervention — this year. Tesla is currently at Level 2.

See Also: Tesla's 'Brutal' China Disruptions Main Worry For Investors Ahead Of Q1 Earnings, Says Analyst

On China: Jonas said he believes Tesla’s long-term future in China is highly uncertain.

“We do see some scope for Tesla to potentially retain an ownership ‘umbilicus’ of a Chinese-controlled Tesla unit but the path may be very winding and unpredictable.”

Musk has recently showered praises on China and its attitude towards EVs but has stayed away from criticizing the country or making any comments about them.

Price Action: Tesla closed 0.87% lower at $865.65 on Friday.