Tesla is not ‘quite out of the woods yet,’ says Morgan Stanley’s Adam Jonas

Tesla has made progress reducing its cash burn but the electric-car maker is not « quite out of the woods yet, » Morgan Stanley’s Adam Jonas told CNBC on Wednesday.

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The auto analyst expects Tesla to burn about $600 million, possibly as much as $1 billion, in cash in the first quarter, but said a partnership with a tech company or another original equipment manufacturer « could go a long way. »

The key for Tesla is to expand beyond a « standalone electric car company » and find resilience as competition in the electric space heats up, said Jonas, who gained a wide following on Wall Street for predicting the rise of Tesla and electric vehicles.

« The biggest question for Tesla share price, let’s say over the next 12 months … is this company finally at a point where it’s self-financing, where it doesn’t need external equity capital to fund its very ambitious plans? » he said on « Fast Money. »

Tesla plans to reveal an electric truck this summer, but a counterpart can gain an edge with its own electric powertrain in the pickup truck market, Jonas said.

Morgan Stanley has a price target of $283 for the stock, which is more than 8 percent lower than its Wednesday close of about $308.

Tesla faces tougher questions as General Motors and Amazon are rumored to be investing in Rivian Automotive, a Detroit-based technology start-up that is the firm’s top pick to compete with Tesla in the near future. Jonas sees Rivian as the next leader in electric pickup trucks.

« Rivian and other start-ups that can get access to the best talent and … capital and … have the business-model chops of an Amazon behind it, that could pose … a much more serious threat to Tesla than, say, the Germans who will have EVs, » Jonas said Wednesday, « but the cultural issues are real limiting factors in our opinion. »

Source: CNBC

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