Morgan Stanley analyst Adam Jonas believes that as cars are increasingly defined by their software, the lines between the automotive and mobile device markets are becoming blurred. He believes this will have an impact on electric vehicle giant Tesla. In a latest report, Jonas maintained an "overweight" rating on Tesla stock and a $400 price target, which is currently the highest price target given to Tesla by Wall Street.
Jonas believes it's not too early for Tesla investors to consider the impact of blurring the lines between the two market segments of cars and mobile devices.
Today, cars are increasingly defined by software, and the key attributes of a connected car include the main hardware of a smartphone, such as battery, screen, camera, modem, antenna, etc. Jonas said these primary pieces of hardware are then wrapped with additional features, such as electric motors, crash safety systems and more.
He added that with Chinese automaker Nio recently launching a smartphone designed specifically for its electric vehicles and Tesla users increasingly using their phones as their primary keys, the merger of the two segments is becoming more absolute.
Jonas said his forecast for Tesla hinges on the electric car giant's ability to expand beyond a certain number of vehicle sales. “The ultimate destination of future mobility will be anything but ordinary,” he wrote.
As Jonas points out, Tesla vehicles are often described as iPhones on wheels. Apple has previously revealed its intentions to build cars, while Tesla has also revealed its intentions to build phones.
While rumors of Tesla's own smartphone project have been circulating for some time, concrete progress has remained elusive. Last year, Tesla CEO Elon Musk briefly mentioned developing an "alternative phone" after acquiring Twitter.
Jonas added that the question of whether Musk's plan to turn X into a super app will require hardware development beyond cars is "difficult" to answer.