Following Tesla’s latest Q4 2023 delivery figures, Morgan Stanley auto analyst Adam Jonas published fresh perspectives on the electric vehicle leader’s future. Jonas sees overseas partnerships and manufacturing as increasingly vital for Tesla to achieve its ambitious volume targets.
In his investor note, Jonas commented that Tesla’s long-term goals likely “cannot be achieved without securing a diverse range of partnerships across global regimes.” Since competition is still minimal outside China, Jonas believes Tesla remains in prime position to dominate EV sales in overseas markets.
However, Tesla must first establish greater overseas production capacity through new collaborations. Jonas suggested joint ventures enabling localized manufacturing will eventually arise to bring Tesla models to more markets.
Why Global Partnerships Matter for Tesla
According to Jonas, guaranteeing supply of battery metals at massive scale and low cost is imperative to win the EV race. While Tesla currently leads on both fronts, it cannot meet global demand alone.
Forming partnerships to build factories overseas helps Tesla overcome import duties, currency fluctuations, and other localization issues. It also avoids political tensions from fully importing American-made vehicles.
Jonas noted how Elon Musk has been actively engaging with international leaders about investments. These discussions coincide with China cementing its status as the #1 passenger car exporter globally (BYD sold over 3 million vehicles in 2023, become the world’s top EV maker).
To keep pace, Tesla must expand its manufacturing footprint worldwide. Jonas believes legacy automakers could even aid this expansion by collaborating on foreign factories.
Where Could Tesla Expand?
Jonas called special attention to Musk’s recent talks with Italian officials about potentially building a European gigafactory in Italy. Locating production in Southern Europe would provide Tesla direct access to key EU markets.
Other analysts speculate Indonesia may be another target thanks to its abundance of nickel resources. Tesla also continues growing its Berlin and Shanghai factories to boost regional output.
Domestically, Tesla is still scouting sites for additional US production capacity according to Musk. The company aims to better balance its China reliance by adding more American facilities.
Partnerships Would Unlock Tesla’s Potential
Morgan Stanley’s upbeat $380 price target for Tesla remains unchanged. But Jonas believes executing the right partnerships is essential for Tesla to reach its 2030 goal of 20 million annual vehicle deliveries.
Teaming with legacy automakers on foreign factories offers an intriguing path for expansion. These collaborations would marry Tesla’s EV expertise with existing auto companies’ local supply chains and workforce.
For now, Tesla still leads the EV race by a wide margin globally. But without greater international presence, rising Chinese brands could begin eroding Tesla’s competitive edge in key markets. Forming strategic partnerships appears vital to secure Tesla’s pole position as EVs achieve mass adoption.
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