On the new Jonas interview:
Tesla's China sales will see a 'steady decline' to nothing beyond 2030: Adam Jonas
His price target is $272, one of the most bearish ones on the market, yet he remain "equal-weight." How does he reconcile that, asks the interviewer.
Jonas: "The range of outcomes for Tesla very wide." He also blames it on the other people at MS (battery, tech) not giving him the ammo he needs to value it higher.
He says his $500+ bull price target requires 5-6 million vehicles per year by 2030, which is double what they (Morgan Stanley) currently forecast. Remember, Musk is targeting 20M by 2030. So, even if he only gets half-way there, he's still about double Jonas' BULL case.
But, he still doesn't answer the question.
Jonas admits: "Retail investors got this right." Investors today are looking for companies with top notch software talent. Some investors thinking 20-30 years out, which cracks him up because he got flak for running DCS on 4-5 year timeframes a few years ago.
But, he warns those investors looking for Tesla to become the most valuable company in the world. "That ain't happening with cars." You need SaaS, full autonomy; especially on autonomy, which is "massively over-hyped" in his view.
He does say that most OEMs hope to be where Tesla was 5 years ago, so an effective 10-year lead for Tesla. Covid turned other OEMs sense of awareness and turned it into urgency. The interviewer should have asked him why he still recommends other automotive OEMs like GM if they're 10 years behind. She didn't.
Jonas is worried about batteries from "the real competition," that being Amazon & Apple. He thinks only half of the 3TwH Musk talked about will go to cars, by 2030, and that's only if they sell drivetrains to other OEMs. I don't think he's doing the KwH per vehicle calculation and multiplying by number of cars.
Jonas did come back with another reason for the low price target: China and data privacy concerns. He pointed out that we wouldn't tolerate a Chinese "autonomous network" operating in Boston, and similarly China won't tolerate a US "autonomous network" operating in China. So, Jonas sees Tesla sales declining in China starting mid-decade and down to zero by 2030. He doesn't say whether the German or other US automakers will have the same problem or not, and the interviewer doesn't ask.
Now, Jonas didn't explain what he meant by an "autonomous network." It sounded to me like he's read too much 5G hype and doesn't realize that Tesla vehicles don't need to connect to the network to drive autonomously. Tesla gathers data to help make their autonomous programming, which is fully contained within the vehicle, better. In China, btw, Tesla shares GPS location data of every vehicle with the Chinese government. So if you're driving a Tesla in China, the government knows where you are.
If I wanted to give Jonas credit, which I don't, I'd say Jonas is talking about the Robo-Taxi network, which does need connectivity, like Uber or Lyft today. But, I don't think Jonas is stupid enough to confuse autonomy with robo-taxi, whereas I do think he's not technical enough to understand how Tesla's autonomy works.
So, there you have it. Jonas has a confusing price target that's $150 below today's price, yet he has an "equal-weight" rating on the stock. That makes no sense - if you think the price is going down significantly, why would you tell your clients to hold the stock? It just shows Jonas really doesn't know where Tesla is going.
Jonas' Bull case is
below my Bear case: Tesla only doing 5-6 million vehicles/year by 2030 AND no autonomy, not energy, no storage.
As for autonomy, my view is that the doubters have not seen for themselves how neural nets learn. Karpathy/Musk made a serious mistake (an obvious one, actually) by only labeling static images returned from cars and not being able to label sequences. That's been fixed, so the next question is what else have they missed and what will it take to accommodate that. But, I don't have doubt that Tesla is on the right track to autonomy and that Jonas's "20 year" timeline is just an ignorant garbage number he tossed out and will regret in a few years.
