Tesla Inc (NASDAQ:TSLA) is the frontrunner in EV manufacturing but it has some catching up to do before it can take the title as top auto industry leader.
Morgan Stanley sees this as a very possible scenario.
The Tesla Thesis: By 2027, Tesla's revenues could grow enough to be larger than legacy automakers General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F) combined, analyst Adam Jonas wrote in a note.
Tesla's U.S. market share was 4%, based on January sales, and sales grew 63% year-over-year even as the broader market unit volume was down 10%, the analyst noted. The company's U.S. share may be around at least 3.5% for the full-year 2022, he said.
The company commands an average transaction price of around $60,000, which is roughly 30% above the U.S. average ATP, Jonas said. This would give the company a 4.6% wallet share, the analyst estimates.
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Applying Morgan Stanley's North American growth forecast through 2030 to its U.S. seasonally adjusted annual rate, Tesla's unit share will hit 10% by the end of 2026 and about 18% by 2030, the analyst said.
The company's U.S. wallet share would reach 10% by 2025 and 23% by 2030, he added.
In a zero-sum game in a low-growth auto market, if Tesla gains a bigger share, there could be others that cede their market share, Jonas said.
The analyst estimates GM's market share will drop from 14.6% in 2021 to 14% in 2025 and less than 12% by 2030. Ford's market share will dip from 12.5% in 2021 to just over 10% by 2030, he added.
Tesla's revenue is likely to surpass a $300 billion run-rate by late 2026, which should be roughly equal to the global consolidated revenues of GM and Ford combined, Morgan Stanley said.
Both GM and Ford, the firm said, can remain "viable, if not important, participants" in the future of the connected/electric mobility ecosystem long term. Both companies must implement significant changes to their business model, including the potential for being smaller, less profitable companies.
Jonas has an Overweight rating and a $1,300 price target on Tesla shares.
Photo: Courtesy Tesla Inc.
