Morgan Stanley: Tesla is going to need big China sales next year in order to make it โ CNBC
What happened: Teslaโs recently announced $2.7 billion capital raise is a โbridgeโ solution, and the company needs to begin manufacturing and selling lower-cost vehicles in China, according to Morgan Stanley analyst Adam Jonas. However, he said that the electric vehicle (EV) makerโs increased dependency on China and robotaxis undermines its investment story. Morgan Stanley said it doesnโt expect significant deliveries of Teslaโs Model 3 until the first quarter of 2020.
Why itโs important: Jonasโ less-than-optimistic outlook comes after Tesla reported disappointing first quarter results and has attempted to boost slow deliveries in China. The companyโs image took a hit last month following an incident in which one of its vehicles self-ignited while parked in Shanghaiโs Xuhui District. Chinese luxury ride-hailing platform Shenma Zhuanche has also taken to social media to voice its grievances over the EV makerโs after-sales service and quality issues, saying that 20% of its 280 Teslas have had electromechanical faults. The US company is expected to begin production at its Shanghai plant later this year to provide lower-priced vehicles to the Chinese market.
