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Tesla is not 'quite out of the woods yet,' says Morgan Stanley's Adam Jonas

  • Tesla could burn as much as $1 billion in cash in the first quarter, Morgan Stanley’s Adam Jonas says.
  • “The biggest question for Tesla … is this company finally at a point where it’s self-financing, where it doesn’t need external equity capital to fund its very ambitious plans?” he says.
  • A partnership with a tech company or another OEM “could go a long way” for the electric car company, he says.

Tesla has made progress reducing its cash burn but the electric-car maker is not “quite out of the woods yet,” Morgan Stanley’s Adam Jonas told CNBC on Wednesday.

The auto analyst expects Tesla to burn about $600 million, possibly as much as $1 billion, in cash in the first quarter, but said a partnership with a tech company or another original equipment manufacturer “could go a long way.”

The key for Tesla is to expand beyond a “standalone electric car company” and find resilience as competition in the electric space heats up, said Jonas, who gained a wide following on Wall Street for predicting the rise of Tesla and electric vehicles.

“The biggest question for Tesla share price, let’s say over the next 12 months … is this company finally at a point where it’s self-financing, where it doesn’t need external equity capital to fund its very ambitious plans?” he said on “Fast Money.”

Tesla plans to reveal an electric truck this summer, but a counterpart can gain an edge with its own electric powertrain in the pickup truck market, Jonas said.

Morgan Stanley has a price target of $283 for the stock, which is more than 8 percent lower than its Wednesday close of about $308.

Tesla faces tougher questions as General Motors and Amazon are rumored to be investing in Rivian Automotive, a Detroit-based technology start-up that is the firm’s top pick to compete with Tesla in the near future. Jonas sees Rivian as the next leader in electric pickup trucks.

“Rivian and other start-ups that can get access to the best talent and … capital and … have the business-model chops of an Amazon behind it, that could pose … a much more serious threat to Tesla than, say, the Germans who will have EVs,” Jonas said Wednesday, “but the cultural issues are real limiting factors in our opinion.”

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