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Investing.com -- Tesla’s brand appeal among younger generations appears to be fading, according to Morgan Stanley’s latest intern survey.
Just 5% of respondents identified Tesla (NASDAQ:TSLA) as their “most desirable car brand,” down from 11% in 2024 and a peak of 30% in 2021. The bank’s survey of around 530 North American interns marks the fourth consecutive annual decline in Tesla’s desirability ranking.
In contrast, legacy German automakers are gaining ground. Mercedes-Benz (ETR:MBGn) and BMW (ETR:BMWG) were the top two choices, with 22% and 16% of the vote, respectively—both up from last year.
Interns also continued to show a strong preference for internal combustion engine and hybrid vehicles over fully electric models, the survey showed.
The decline in sentiment was even more pronounced in the autonomous vehicle space. “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,” analysts led by Adam Jonas said in a note.
At the same time, interest in Uber (NYSE:UBER) and Alphabet/Waymo’s offerings surged to 30% and 23%, respectively.
Morgan Stanley (NYSE:MS) maintained its Overweight rating and $410 price target on Tesla shares.
The Wall Street giant believes 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.”
“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,” they added.
Tesla also remains Morgan Stanley’s “Top Pick” in the U.S. autos sector.
The bank also sees growing potential for strategic integration across Tesla-affiliated ventures. It highlights future synergies such as Grok in vehicles, SpaceX tech in Cybertrucks, Neuralink using Optimus prosthetics, and xAI training embedded in Tesla products.
These links, combined with Tesla’s infrastructure like Megapacks powering xAI datacenters, point to the company’s broad positioning in what the analysts call the “shores of physical AI.”