Will Apple Buy Tesla This Year? Morgan Stanley Says Don’t Count On It

American electric vehicle maker Tesla’s growth story has been trashed by Tesla bull and admirer Adam Jones of Morgan Stanley.

The Tesla bull also sees no scope of tech giant Apple taking over the Elon Musk-led public company for so many reasons.

Speaking at a private call with institutional clients, Jones said Tesla is no longer a growth story but a “distressed credit story.”

Jones had been a vocal admirer of Tesla’s technology and CEO Elon Musk’s vision for the auto industry.

The analyst contrasted the current scene in Tesla with that of the bright innings it had in Q4 2018. That time demand exceeded supply, cash flow was high and excitement around the model Y was too high.

Today “Tesla is not really seen as a growth story,” and added that “it seems more like a distressed credit and restructuring story.”

Everything has changed now. Low demand, high cash burn, no buzz on Model X plus lack of strategic involvement in cash raise is haunting Tesla.

Rules out Apple’s takeover of Tesla

The long-time Tesla bull also ruled out reigning talk that the electric vehicle maker will be acquired by tech giants like Apple or Amazon.

The rumor mills were activated by the comments of analyst Craig Irwin of Roth Capital Partners in an interview on Tuesday, where he mentioned a past rumor that Apple was ready to buy Tesla.

But Jonas sees no hope on that front also. For reasons of risk mitigation and liability containment, tech giants will not like any exposure to unlimited liability, owning a business where occasionally a car catches on fire, kills a pedestrian or passenger, he observed.

Jones said the auto industry has an ugly side to it. The roads are dangerous. “There’s a lot of stored energy in a vehicle. And the regulatory environment around autonomous cars has not had time to cure yet," he quipped.

Jonas acknowledged that Apple is interested in transportation just like Amazon and many other tech firms.

However, Morgan Stanley does not believe Apple will be floating a full-fledged service or related hardware to transportation until the 2030s.

Jones added that big tech firms will not go the whole hog by exposing too high into the auto sector. They know autonomous vehicles are a marathon race and take 10 or 20-years to collect real-world miles. For staying out there, many ways exist and it need not be like “owning a full-stack, awesome, great auto company.”

Tesla may miss delivery guidance in Q2

Jonas said Wall Street is expecting Tesla will miss delivery target for Q2. Analysts are expecting only 70,000 vehicles in the second quarter of 2019. Even at an over-optimistic estimate of 82,000 vehicles, Tesla will still miss own guidance to deliver 90,000 cars in Q2 per the letter Musk wrote to shareholders.

Tesla’s shares were down since May 16 by an average of 15 percent. The slide came after reports said CEO Elon Musk asked employees to prune spending and he is personally monitoring expenses. Adding to investor apathy was not so exciting consumer reports review of Tesla’s new Autopilot Navigate feature in the Model 3 electric sedans.