Summary of Tesla Inc. 7th Annual Intern Survey Industry Overview - **Company**: Tesla Inc - **Industry**: Automotive and Shared Mobility - **Survey Context**: The survey reflects the preferences of approximately 530 Morgan Stanley North American summer interns regarding automotive brands and services Key Findings 1. **Decline in Brand Preference**: Only 5% of interns identified Tesla as their 'most desirable car brand', a significant drop from 11% the previous year and a continued decline from a peak of 30% in 2021 [2][3] 2. **Competitor Rankings**: Mercedes and BMW emerged as the top two preferred brands, with 22% and 16% of responses, respectively, compared to 19% and 16% last year [3] 3. **Powertrain Preferences**: Interns showed a strong preference for internal combustion engine (ICE) vehicles over electric vehicles (EVs) at a ratio of nearly 2 to 1, with 29% favoring pure ICE and 15% for EVs. Hybrids were the most preferred powertrain at 39% [4] 4. **Robotaxi Service Preference**: Over half of the interns preferred an Uber-developed or Alphabet/Waymo robotaxi service, with only 12% indicating they would choose a Tesla robotaxi, down from 31% last year [5] Investment Insights 1. **Morgan Stanley's Rating**: The firm maintains an Overweight rating on Tesla shares with a price target of $410, supported by the belief in Tesla's capabilities in physical AI, robotics, and energy storage, which are expected to drive growth beyond traditional EV sales [6] 2. **Growth Potential**: Tesla is positioned to leverage its data and manufacturing capabilities to expand into high-margin software and services, with expectations that services will account for 31% of total EBITDA by 2030 [32] 3. **Market Capitalization**: As of July 31, 2025, Tesla's market capitalization was approximately $1,084.8 billion, with a stock price of $308.27 [9] Financial Projections 1. **Earnings Estimates**: Projected EPS for fiscal years ending December 2024, 2025, 2026, and 2027 are $2.41, $1.37, $2.69, and $4.34, respectively [9] 2. **Revenue Growth**: Total revenue is expected to grow significantly, with estimates of $97.69 billion in 2024 and $141.22 billion by 2027 [38] Risks and Considerations 1. **Competition**: The report highlights the increasing competition from traditional OEMs, startups, and large tech firms, which could impact Tesla's market share and growth [43] 2. **Execution Risks**: Potential risks include challenges in ramping up production at multiple factories and market recognition of Tesla's service opportunities [43] Conclusion - The survey indicates a notable shift in consumer preferences away from Tesla, particularly among younger demographics, which could pose challenges for the brand's future desirability. However, Morgan Stanley's bullish outlook on Tesla's broader capabilities and growth potential in AI and services suggests a complex but potentially rewarding investment landscape.

Core Viewpoint - Tesla is facing significant challenges with declining vehicle sales, thinning profits, and potential loss of revenue from regulatory credits due to policy changes, leading to a negative investor sentiment [1][2]. Sales Performance - Automotive sales for Tesla declined by 16% year-over-year in the second quarter, with particularly weak sales in Europe and California [3]. - The company anticipates "a few rough quarters" ahead due to expiring EV credits and tariffs imposed by the Trump administration [3]. Stock Performance - Tesla's stock fell 8% in one day and has decreased by 22% year-to-date, marking the worst performance among major tech companies [4]. - Despite a slight recovery of 3.5% on the following day, the overall trend remains negative compared to the Nasdaq, which rose by 1% for the week and over 9% in 2025 [4]. Analyst Sentiment - Analysts from Canaccord Genuity expressed optimism about Tesla's long-term potential with robotaxis but emphasized the need for improved profit and loss dynamics in the short term [4]. - Jefferies described the latest earnings update as "a bit dull," while Goldman Sachs noted that Tesla's robotaxi initiative is still in its early stages with limited data [4].

Core Viewpoint - Pomerantz LLP is investigating claims of potential securities fraud or unlawful business practices involving Tesla and its officers or directors, following a significant drop in Tesla's stock price due to an NHTSA investigation into its robotaxi service [1][3]. Group 1: Investigation Details - Pomerantz LLP is representing investors of Tesla, urging them to come forward regarding potential securities fraud [1]. - The investigation is focused on whether Tesla and its leadership have engaged in unlawful business practices [1]. Group 2: Recent Events Impacting Tesla - Tesla launched its robotaxi service on June 22, 2025, in Austin, Texas, which was highly publicized [3]. - Following the launch, the NHTSA contacted Tesla due to reports of robotaxis driving erratically and violating traffic laws, leading to a sharp decline in Tesla's stock price [3].

Core Viewpoint - Rivian Automotive is currently undervalued compared to competitors like Lucid Group and Tesla, with potential for significant growth starting in 2026 as new models are introduced and production costs decrease [2][3][6] Group 1: Current Valuation and Market Position - Rivian shares trade at a discount of 2.7 times sales, compared to Lucid's 7.1 times and Tesla's 11.5 times [2] - The current discount is justified due to slower sales growth compared to Lucid and Tesla's capital advantages [3] Group 2: Future Growth Prospects - Rivian plans to begin production of the R2 midsize SUV in early 2026, priced around $45,000, followed by the R3 and R3X models [5] - The introduction of these new models is expected to attract tens of millions of new buyers, significantly expanding Rivian's market presence [5] Group 3: Financial Improvements - Rivian has already seen a 34% reduction in R1 manufacturing costs as it prepares for R2 production, indicating potential for improved gross margins [6] - Despite recent challenges such as the elimination of federal regulatory credits, long-term normalized margins are expected to rise [6] - With shares at multi-year lows, there is an opportunity for investment before these financial catalysts materialize [6]

Core Insights - Pomerantz LLP is investigating claims on behalf of Tesla investors regarding potential securities fraud or unlawful business practices by the company and its officers [1][3] - Tesla launched its robotaxi service on June 22, 2025, but faced scrutiny from the NHTSA due to reports of erratic driving behavior from the robotaxis, leading to a significant drop in Tesla's stock price [3] Group 1 - Pomerantz LLP is recognized for its expertise in corporate, securities, and antitrust class litigation, having a history of recovering multimillion-dollar damages for victims of securities fraud [4] - The NHTSA's investigation into Tesla was prompted by numerous online videos showing the robotaxis violating traffic laws, which has raised concerns among investors [3] Group 2 - The investigation by Pomerantz LLP indicates potential legal challenges for Tesla, which could impact investor confidence and the company's market performance [1][3]

Core Viewpoint - Tesla is preparing to launch its robotaxi services imminently, with a specific date set for June 12, which has generated significant investor interest and a stock price increase of approximately 23% last month despite a weak earnings report for Q1 2025 [1][10]. Group 1: Tesla's Robotaxi Launch - The robotaxi service will initially deploy about 10 Model Ys in Austin, with plans to scale up to 1,000 vehicles in the following months, although the service will be geo-fenced to avoid unsafe areas [8][10]. - CEO Elon Musk confirmed successful testing of a Model Y without a driver on public streets, indicating progress towards fully autonomous rides [7][8]. - The company aims to revolutionize mobility by offering cheaper rides without drivers, similar to Uber and Lyft, but at a lower cost [3]. Group 2: Cathie Wood's Position - Cathie Wood's ARK Innovation ETF sold around 50,000 Tesla shares worth approximately $17 million, but Tesla remains the top holding in the fund, with a price target of $2,600 by 2029 [2][3]. - The sale is interpreted as a strategic move to "sell high, buy low," allowing the fund to book gains while maintaining a long-term bullish outlook on Tesla's future [4][10]. Group 3: Competitive Landscape - Tesla is entering the robotaxi market later than competitors like Alphabet's Waymo, which currently dominates the U.S. market with over 250,000 paid rides per week and significant investments planned [9][10]. - Waymo has already established commercial services in four U.S. cities and has partnered with Uber to expand its reach, posing a competitive threat to Tesla's ambitions [9]. Group 4: Tesla's Core Business Challenges - Tesla's core EV sales are declining, with a reported 15% year-over-year drop in China sales and the weakest quarterly deliveries in over two years [12][13]. - The company faces increasing competition from both legacy automakers and new entrants in the EV market, compounded by reputational issues stemming from CEO Elon Musk's political controversies [13]. Group 5: Valuation Concerns - Tesla's stock is trading at a forward price-to-sales ratio of 10.23, significantly higher than the industry average of 2.75, indicating that much of the current valuation is based on optimistic projections regarding its robotaxi business [15][17]. - Analysts suggest that the market is pricing in significant breakthroughs in unproven areas like autonomous driving, which may take years to materialize [15][17].

Core Insights - Tesla is set to launch its first robotaxi service in Austin, TX, with a tentative start date of June 12, marking a significant step into the autonomous vehicle market [1][2] - The robotaxi service will utilize Tesla's Full Self-Driving (FSD) software, with CEO Elon Musk stating that Model Y vehicles are already being tested on public roads without a driver [2] - Despite the excitement, there are concerns regarding the lack of detailed information about the service's operational aspects, including vehicle deployment and safety measures [3][11] Tesla's Competitive Position - Tesla faces stiff competition from Waymo, which currently leads the U.S. robotaxi market, operating commercial services in four cities and providing over 250,000 paid rides weekly [6] - Waymo has adopted a cautious approach, focusing on data collection and safety studies, while Tesla has relied on bold claims from its CEO without substantial public data [7][20] - Tesla's robotaxis are expected to have a cost advantage, with production costs estimated at $50,000 compared to Waymo's $180,000 due to Tesla's reliance on cameras instead of high-end sensors [9] Market Challenges - Tesla is experiencing declining deliveries and increased competition from both legacy automakers and new entrants like BYD, which has surpassed Tesla in EV deliveries for two consecutive quarters [12][13] - The company has been offering deep discounts to boost demand, which is negatively impacting profit margins, leading to a reduction in growth targets for 2025 [14] - Tesla's stock has seen a 23% increase recently, likely due to optimism surrounding the robotaxi launch, but much of this may already be priced into the stock [4][22] Valuation Concerns - Tesla's forward price/sales ratio stands at 10.69, significantly higher than the industry average of 2.77, raising concerns about overvaluation [16] - The market appears to be pricing in expectations for breakthroughs in high-risk areas like autonomous driving, which remain unproven [18][21] - Given the current challenges in Tesla's core EV business and the uncertainties surrounding the robotaxi launch, the investment case appears weaker [21][22]

Core Insights - Tesla is set to launch its robotaxi service in Austin in June, following years of delays and amidst a competitive landscape where some competitors like GM's Cruise have exited the market [1][3] - Elon Musk emphasizes Tesla's unique approach to autonomy, relying on cameras and AI, which could allow for quicker and more cost-effective scaling of robotaxis compared to competitors [2][3] Robotaxi Launch Details - The initial rollout will be a "pilot" launch with approximately 10 robotaxis in the first week, potentially scaling to 1,000 within a few months [8][9] - The launch will be "invite only" and will include tele-operators to ensure safety, differing from competitors who use remote human workers for guidance [4][5] Vehicle Specifications - The first robotaxis will likely be Model Ys, which will become autonomous through a software update, with no changes to the physical vehicle [12] - Tesla's Cybercab, a separate product, is expected to begin volume production in 2026, with prototypes currently being developed [17][18] Business Model - Musk describes the robotaxi business model as a mix of Airbnb and Uber, allowing Tesla owners to earn money by adding their cars to the autonomous fleet [14][15] - Owners could potentially earn around $30,000 a year from the service, making it financially attractive [14] Ordering Process - A ride-hailing mobile app is in development, allowing users to request robotaxi services and adjust settings before pickup [16]