The decline in the value of Tesla shares continues to keep some investors on their toes. However, Morgan Stanley now sees a good Tesla stock buying opportunity.

Morgan Stanley analysts studied the automotive market. They wondered whether big automotive companies are “blinking” on electric vehicles and said they see this as a buying opportunity for Tesla while reiterating an Overweight rating and $330 price target on Tesla shares in their note on Wednesday, according to investing.com.

“Big auto blinking? It was far easier to take EV hegemony for granted at 0% Fed funds and when Tesla was a trillion $ company. Are we sure batteries are the only (or ultimate) path to decarbonizing transport? Is the technology cheap enough "Is our electric grid ready? Are the enabling policies viable? Stories like Porsche (covered by Harald Hendrikse) investing in eFuels as a 'dual path'/complementary technology to EVs is worth watching,” wrote analysts.

They added that Tesla lost $600 billion in value in just three months, and as an “ambassador” for electric vehicles, its assessment “raises questions for investment returns and capital formation across the sector.” However, the current situation in the sector only indicates that Tesla will use its advantages as a competitive force. Analysts expect the manufacturer to cut the prices of its electric vehicles, which will launch the next phase of their mass adoption. This will reduce the profitability of many companies in the sector.

“Look for Tesla to use its cost and scale advantage as a competitive force,” the analysts continued. “Tesla's price cuts started in China and we expect them to quickly spread to Europe and the US. While circular in nature, lower EV prices are important for the next leg of mass adoption, but depress the returns of many of the companies expected to compete against Tesla.”

© 2022, Eva Fox | Tesmanian. All rights reserved.

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Eva Fox holds zero shares of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.