Tesla’s allure among younger consumers seems to be diminishing, based on Morgan Stanley’s latest survey of interns.
Only 5% of participants chose Tesla (NASDAQ:TSLA) as their “most desirable car brand,” a significant drop from 11% last year and far below its peak of 30% in 2021. This survey, which polled roughly 530 North American interns, marks the fourth straight year Tesla’s popularity has declined.
Meanwhile, established German carmakers are gaining traction. Mercedes-Benz (TG:MBG) and BMW (TG:BMW) claimed the top two spots, with 22% and 16% support respectively—both increasing from the prior year.
The survey also indicated interns still favor traditional internal combustion engine and hybrid vehicles over fully electric ones.
The drop in enthusiasm was even more striking when it came to autonomous vehicles. “12% of interns indicated they would be most likely to use a Tesla robotaxi over alternatives, a sharp decline from 31% last year and 38% in 2023,” noted analysts led by Adam Jonas.
Conversely, interest surged for Uber (NYSE:UBER) and Alphabet/Waymo, which attracted 30% and 23% of respondents respectively.
Morgan Stanley reaffirmed its Overweight rating on Tesla and maintained a $410 price target.
The firm stated that “Tesla’s capabilities in key areas of physical AI (AVs, humanoids and other form factors) … offer growth and margin opportunities that greatly exceed those of the traditional EV business, which is under pressure.”
They added, “While there are a growing number of U.S. efforts to push the boundaries of physical AI, we struggle to think of any other company as well positioned as Tesla in terms of data, robotics, energy, AI, manufacturing and supporting infrastructure.”
Tesla remains Morgan Stanley’s “Top Pick” within the U.S. automotive sector.
The bank also pointed to increasing potential for strategic synergy across Tesla-related ventures, highlighting future integration such as Grok in vehicles, SpaceX technology in Cybertrucks, Neuralink employing Optimus prosthetics, and xAI training embedded within Tesla products.
These connections, alongside Tesla’s infrastructure like Megapacks powering xAI data centers, underscore the company’s broad footprint in what the analysts refer to as the “shores of physical AI.”
This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.