The Road to ROI: Patience Required

Research evidence excerpt

The Road to ROI: Patience Required

Idea

July 23, 2026 04:13 AM GMT

Morgan Stanley & Co. LLCMTesla Inc | North America Andrew S Percoco

Equity Analyst

The Road to ROI: Patience Andrew.Percoco@morganstanley.comDaniela M Haigian +1 212 296-4322

Daniela.Haigian@morganstanley.com +1 212 761-6071

Required Jahvonte G Bain

Research Associate

What’s Changed Jahvonte.Bain@morganstanley.com +1 212 761-9231

Katherine A Bennorth

Tesla Inc (TSLA.O) From To Research Associate

Price Target $417.00 $400.00 Katie.A.Bennorth@morganstanley.com +1 212 761-3753

We view Tesla's accelerating capex cycle as a necessary Tesla Inc (TSLA.O, TSLA US)

Autos & Shared Mobility | United States of America

investment to secure leadership in autonomy & robotics.

Stock Rating Equal-weight

However, these investments push FCF further into negative Industry View In-Line

Price target $400.00

territory, increasing focus on tangible Robotaxi & Optimus Shr price, close (Jul 22, 2026) $374.01

milestones. We lower our PT to $400 reflecting elevated cash Mkt52-Weekcap, currRange(mm) $498.83-297.82$1,323,247

burn. Fiscal Year Ending 12/25 12/26e 12/27e 12/28e

EPS ($)** 1.67 1.70 2.07 2.69

Key Takeaways PriorModelWareEPS ($)**EPS ($) 1.07- 2.200.71 2.500.76 3.111.39

TSLA remains positioned to lead in Physical AI, but the ROI on a heavy capex Unless otherwise noted, all metrics are based on Morgan Stanley ModelWare

framework

cycle requires patience and consistent execution. ** = Based on consensus methodology

e = Morgan Stanley Research estimates

FSD adoption was an upside surprise, with North America attach rates reaching

55% in the quarter, far surpassing our 25-30% estimate.

Robotaxi commentary was upbeat; we need density + larger sample of safety

data within existing cities, not just geographic expansion.