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Investing.com-- Morgan Stanely analysts said in a recent note that they remained Overweight on Tesla (NASDAQ:TSLA) despite near-term headwinds from a public feud between CEO Elon Musk and U.S. President Donald Trump.
MS maintained its Overweight rating on Tesla with a price target of $410– representing an upside of nearly 39% from the stock’s close on Friday. Tesla had plummeted nearly 15% last week as the feud boiled over, with Musk and Trump both engaging in personal attacks against each other on social media.
But they were seen softening their rhetoric over the weekend, although reports said Trump had no plans to speak to Musk, who had stepped down from his White House role in late-May.
Trump’s “big beautiful” tax and spending bill appeared to be at the heart of the argument, with Musk having repeatedly (and harshly) criticized the bill.
MS said that the phasing out of electric vehicle tax credits, as outlined in the bill, was not material to the long-term outlook for Tesla.
The brokerage noted that an earlier rally in Tesla– which saw the stock surge over 50%-- was likely driven by Musk’s vow to step back from the government and spend more time at Tesla.
They also noted that increased political attention could “temporarily alienate” customers on multiple sides of the political spectrum, presenting more demand pressure on Tesla.
Tesla’s sales plummeted in recent quarters as the company faced consumer backlash over Musk’s political actions. Increased competition from Chinese majors such as BYD (SZ:002594), coupled with an aging EV lineup, added to sales pressure.
But MS said the long-term outlook for Tesla remained positive. “While emotions are running high, we are not convinced the longer-term vectors that drive the stock’s value have changed here.”
“AI leadership, autonomy/robotics, manufacturing, supply chain re-architecture, renewable power, critical infrastructure... Tesla still holds so many valuable cards that are largely apolitical, in our opinion,” MS analysts wrote in a note.
Musk has also largely touted AI, robotics, and self-driving cars as the next leg of growth for Tesla.
Still, MS warned that Tesla was likely to trade volatile in the near-term, and that the stock could fall further in the coming weeks.
Tesla’s recent losses saw the stock nursing a 22.2% loss so far in 2025.