Morgan Stanley expects Tesla (NASDAQ: TSLA) to surpass GM and Ford combined by 2027 as it significantly increases its market share in the US. The firm's price target for TSLA is $1,300, which represents 40% upside potential.

Tesla reported a strong Q4 2021 with 65% year-on-year sales growth, prompting analysts to revise their forecasts for the manufacturer's future development. Morgan Stanley analyst Adam Jonas believes Tesla will generate more revenue by 2027 than Ford and General Motors combined. He wrote that the zero-sum game is hard to see today, but it should become obvious over the next 24 months.

In his research note, Jonas highlighted the main theses:

• Tesla's US market share was 4.0% on sales up 63% YoY vs. the broader market unit volume down 10% YoY.
• For the full year firm conservatively estimates Tesla’s US share will average 35%.
• Morgan Stanley estimates the typical Tesla sold commands an average transaction price (ATP) of approximately $60,000 or roughly 30% above the US average ATP, implying an adjusted ‘wallet share’ of 4.6%.
• Applying its Tesla N. American growth forecast through 2030 to the firm's forecast of US SAAR, Morgan Stanley estimates Tesla's US unit share reaches 10% by the end of 2026 and nearly 18% by 2030.
• Jonas wrote that the estimated Tesla share of US wallet should reach 10% by 2025 and 23% by 2030.
• In a zero-sum game in a low-growth auto market, if someone gains share, Morgan Stanley believes there must be a group of share donors.
• Firm estimates Tesla can gain well over 1,000 basis points of share by end of the decade, implying some significant share donors along the way.
• For example, Morgan Stanley estimates GM's US market share (14.6% in the US in 2021) falls to 14% by 2025 and <12% by 2030.
• Firm estimates Ford's US market share drops from 125% in 2021 to just over 10% by 2030.
• Jonas forecasts Tesla’s share of US auto wallet (revenue share) to surpass GM by late 2026/early 2027.

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