According to Morgan Stanley, Tesla Inc. could benefit disproportionately from the US infrastructure package, and auto investors risk losing out on equity ownership.
The Biden administration is proposing $ 174 billion to develop the nation’s electric vehicle ecosystem, which could leverage Tesla’s edge over legacy car companies and even some new entrants, analyst Adam Jonas wrote Wednesday. However, he warned that development can be unstable, which entails some short-term uncertainty that can change from year to year.
“This is likely to be complicated by a maze of national and local laws that present advantages and disadvantages to different automakers, depending on the year you choose to analyze,” Jonas said. In the long term, however, “car investors face a lot of risk. do not own Tesla shares in their portfolio than own Tesla shares in their portfolio. “
The company, led by Elon Musk, undoubtedly the current leader in the global electric vehicle market, reported surprisingly strong first-quarter shipments earlier this week, even as most automakers are grappling with a chip shortage that is forcing production to stop. Regardless, Tesla stock has been stuck in a rut over the past month and has dropped about 5% this year. The stock is up 743% last year.
The bill, which includes shopping incentives, charging infrastructure and network improvements, will benefit Tesla, which has more EV products in its development stage than most manufacturers, Jonas said.
Morgan Stanley has a Tesla equivalent rating and a target price of $ 880. Analysts’ average target for stocks is $ 651 with 17 buy, 13 hold and 12 sell recommendations.
Tesla shares fell 3% on Wednesday to $ 670.97, the biggest drop since March 26.