Morgan Stanley Analyst’s Proposal
Morgan Stanley analyst and Tesla Inc TSLA bull Adam Jonas recently suggested that legacy automakers like Ford Motor Co F, General Motors Co GM, and Stellantis NV STLA consider partnerships with each other or China to navigate the dominance of Chinese electric vehicles (EVs).
Need for Partnerships
Jonas emphasized the intertwining of mass EV adoption and China, pointing out that stringent trade barriers on Chinese imports could hinder EV adoption in the West, setting back EV investment significantly.
To bridge this gap, Jonas mentioned Mexico as a potential intermediary, suggesting that the country could leverage Chinese equipment and knowledge to produce low-cost EVs as a viable step toward on-shoring.
Implications and Industry Concerns
Legacy automakers have voiced concerns about the threat of lower-cost Chinese EVs dominating the U.S. market. For instance, during a recent panel discussion, Ford’s EV unit’s COO Marin Gjaja labeled Chinese EV manufacturers as a “colossal strategic threat,” emphasizing the looming competition and potential circumvention of U.S. tariffs through operations in Mexico.
Even Tesla CEO Elon Musk echoed similar sentiments, highlighting the potential impact of trade barriers on global car companies, suggesting that Chinese EV makers could overpower most other car companies worldwide if not for these barriers.