Against this backdrop, Morgan Stanley analyst Adam Jonas drew inspiration from the tried-and-tested principles of economics, sociology and investment to analyze the state of the industry.

Utility, Lowest Cost Matters: While discussing pricing, noted economist Adam Smith says a commodity is sold at its natural price when it yields "neither more, nor less than what is sufficient to pay the rent of the land, the wages of the labor and the profits of the stock employed in raising, preparing and bringing it to the market.”

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Darwin's Natural Selection Theory: Charles Darwin, the father of evolution, said in his theory of natural selection that beings with adaptive traits that give them some advantage are most likely to survive.

The Morgan Stanley analyst noted that there has been a rapid proliferation of EV companies and business plans. He sees consolidation as the next chapter.

"Survival and success may not be dictated by who is the biggest and the richest company, who is able to adapt to the changing environment," he said.

Lesson From Buffett: Investment guru Warren Buffett highlighted the existence of a huge difference between a business that grows and doesn't require capital, and a business that grows and requires a lot of capital.

Jonas said, "While we do believe the legacy auto company can have a place in the emerging EV and AV market, we believe that securing that place will require substantial trade-offs and the assumption of unfamiliar risks."

That said, the analyst said he sees significant and underappreciated value in the portion of the business that may be in decline such as the ICE business. This may require far lower capital to run over the remaining decades of run-off, he added.

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