Investment bank agrees with Elon Musk on the true driver of Tesla's stock
Tesla delivered 484,507 vehicles for the quarter, about in line with Street expectations.
Tesla (TSLA) - Get Free Report had another record-breaking year, delivering a total of 1.81 million vehicles in 2023. The electric vehicle leader delivered 484,507 units in the fourth quarter, about in line with Street expectations.
Despite its current position of EV dominance, the competition has recently begun to heat up. Chinese automaker BYD sold more than three million electric vehicles for the year; 1.6 million of that total was made up of sales of fully electric vehicles, while sales of plug-in hybrids made up the rest.
The company sold more than 900,000 units in the fourth quarter of 2023 alone, 526,409 of which were fully electric, marking the first quarter in which a competitor sold more fully electric cars than Tesla.
Related: Major electric vehicle competitor is catching up to Tesla's record 2023 sales
Tesla Chief Elon Musk, however, thinks the two companies aren't comparable. Tesla, he wrote in a Wednesday post, is an "AI/robotics company that appears to many to be a car company," a sentiment that he has expressed many times before.
It's an impression that some on Wall Street have lately begun to agree with. Wedbush Securities analyst Dan Ives has contended for months that Tesla is at the beginning of an explosive period of growth, centered around the coming monetization of its software and services.
Morgan Stanley's Adam Jonas, who recently maintained a $380 price target for the stock, believes that Tesla is more than just a carmaker.
He said in September that Tesla's Dojo supercomputer, by expanding its network services and accelerating its push into robotaxis, could add as much as $500 billion to the company's market cap.
In a Wednesday note, Jonas said that, although Tesla's car business currently dominates its revenue flows, the business of making cars is something that serves as an "accelerator laboratory" for Tesla to develop a list of related technologies and software.
"We believe the stock will increasingly be driven by other factors, particularly as the company's business model diversifies away from selling cars over time," he said.
Jonas expects Tesla to deliver 2.25 million units in 2024, a growth of just under 25%. He also expects the average transaction price to dip 3.7% as the company's auto gross margins continue to fall from 17.2% to 12.9%.
Tesla will report fourth-quarter earnings results on Jan. 24.
Related: Prominent investment bank just boosted its Tesla price target by $150
Tesla and BYD
Jonas noted that BYD's surging growth is largely due to the company's advertising campaigns and strong sales overseas, though he said that a degree of trade protectionism could hinder the company's future growth in the U.S and Europe.
Looking just at the EVs that Tesla produces, Jonas doesn't see anyone outside of China that can compete with Tesla in a meaningful way.
Even as Tesla continues to sell a record number of EVs, many traditional American automakers have pulled back on their EV investments, citing near-term production and profitability challenges.
Musk, Jonas said, is currently shoring up Tesla's dominance.
"Tesla's long-term volume goals cannot be achieved without securing a diverse range of partnerships across global regimes," he said, noting Musk's recent meetings with Italian officials, including Prime Minister Giorgia Meloni.
Italy is looking to attract EV and battery investment, though Tesla has not commented on the possibility of such an investment in the country.
Italian Minister of Infrastructure Matteo Salvini said in 2022 that he would "open the doors" for Musk to work in the country. 
Bloomberg reported Wednesday that the Italian government is considering a $1 billion plan to incentivize people to make the switch to electric vehicles.
"We don’t think it’s a coincidence at all that Tesla’s ‘stepped up’ engagement with foreign countries comes at time when China has surpassed Japan as the largest exporter of passenger cars," he said.
Shares of Tesla, which roughly doubled in 2023, fell more than 3% at last check Wednesday.
Contact Ian with tips via email, [email protected], or Signal 732-804-1223.
Related: A top analyst says Tesla will have a $1 trillion market cap next year
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