Tesla Poised For Outsized Benefit From Volkswagen Scandal, Morgan Stanley Argues

Morgan Stanley analyst Adam Jonas said that not only would the Volkswagen scandal raise the cost of doing business for combustion-engine producers, but that the cost "could take some investors by surprise."

The market, Jonas pointed out, is trying to grasp these numbers. Meanwhile, publicly traded global auto companies have shed $200 billion in value – an amount equivalent to Toyota Motor Corps (ADR) TM's market capitalization.

The Impacts Will Have A Far Reach

Therefore, Jonas said that the impacts will be felt far and wide – not just with diesel engines. That will lead to higher fixed costs per unit, which is a factor that will ultimately benefit Tesla Motors, Jonas suggested.

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Not only do electric vehicle manufacturers like Tesla not spend any money on vehicle emissions regulations, but "they get paid for selling ZEV credits."

Why Tesla?

While Jonas conceded that it's "easy" to make an electric vehicle, he argued that replicating Tesla is much harder. "It's far harder to make a car with a completely in-house OS designed for machine learning via over-the-air updates to enhance energy storage, performance, mapping and autonomous features as the car is operated in the real world," he concluded.

Rating Implications

As a result of these strong currents, Jonas reiterated an Overweight rating and $465 price target on Tesla – a level that represents 86 percent appreciation from current levels. Further, Tesla is the firm's Top Pick in autos.