Morgan Stanley sends a blunt Tesla message to investors

Morgan Stanley reiterated an Equal Weight view on Tesla with a $415 price target, arguing that Tesla’s long-term AI narrative remains intact but investors now need concrete execution. The note says Q2 results highlighted pressure from rising spending, weaker gross margins, and negative free cash flow, shifting attention to measurable progress in Robotaxi and Optimus. A key positive was a 55% FSD attach rate in North America, well above Morgan Stanley’s 25%-30% estimate, but the firm wants clearer proof that Robotaxi can scale through higher ride volume, utilization, and economics—not just more city launches. For Optimus, it wants evidence beyond production talk, including real-world operation, manufacturing cost visibility, and customer demand. The message is constructive but conditional: Tesla’s AI upside could justify more valuation if the next quarter delivers hard data.