Morgan Stanley's valuation framework assigns US$47 per share of value to Tesla's core electric vehicle business, while Robotaxi, network services, and the Optimus humanoid robot together account for US$330 per share. Recent deliveries of 480,100 vehicles and the deployment of 13.5 GWh of energy storage systems have strengthened Tesla's AI-driven fundamentals. However, the company's expanding AI capital expenditure exceeding US$

25 billion, continued negative free cash flow, the pace of Robotaxi demand and production expansion, and the commercialization timeline for Optimus remain the key factors that will determine whether Tesla can justify its highly optimistic valuation, which is closely tied to its proprietary AI computing infrastructure and broader physical AI ecosystem.

Morgan Stanley's investment thesis is straightforward. While stronger-than-expected EV deliveries have improved Tesla's near-term earnings outlook, the firm's future valuation will not be determined by selling a few hundred thousand additional vehicles. Instead, the real catalyst for a valuation re-rating will be whether Robotaxi, Full Self-Driving (FSD), Optimus, and Tesla's AI-powered energy storage ecosystem can demonstrate that the company's physical AI platform has entered large-scale commercial deployment.

Looking ahead, Morgan Stanley expects moderate recovery in revenue and vehicle deliveries, with profitability from Tesla's traditional automotive business stabilizing. However, substantial AI investments are expected to weigh on free cash flow in the near term before generating meaningful commercial returns. Notably, the firm's model does not assume that Tesla's automotive business returns to hyper-growth. Its 2030 delivery forecast has only been revised slightly upward from 2.635 million to 2.65 million vehicles. Instead, Morgan Stanley believes Tesla's long-term earnings potential will primarily come from the expansion of its AI-driven energy storage business, FSD subscriptions, Robotaxi platform commissions, fleet services, and strong future demand for Optimus.

Regarding FSD and Robotaxi, Morgan Stanley forecasts that Tesla will have a combined fleet of approximately 1,500 supervised and fully autonomous Robotaxis by the end of 2026, increasing to roughly 30,000 vehicles by 2030. Nevertheless, the bank emphasizes that this year's fleet size is unlikely to make a meaningful contribution to profits. Investors are instead focused on Tesla's ability to expand into additional cities, achieve fully driverless operations without safety operators, and accelerate Cybercab production.

Optimus is also progressing from the prototype stage toward manufacturing readiness. Tesla has reportedly begun installing its first mass-production line and has asked suppliers to increase component production capacity to approximately 1,000 units per week by September, with a target of 2,000 to 2,500 units per week by year-end.

Market Insight:

Investors may still be underestimating Tesla's transformation from an electric vehicle manufacturer into a physical AI platform company. Powered by Tesla's AI supercomputing infrastructure, its FSD software has the potential to convert the existing vehicle fleet into a high-margin software network. Robotaxi could transform autonomous driving into a mileage-based mobility service, while Optimus extends the same vision, reasoning, and control technologies into the broader labor market, opening up an entirely new avenue for long-term AI-driven growth.