Morgan Stanley predicts that a wave of cooperation between Chinese and American electric vehicle companies will begin, leading to a "reassessment of value" for US car companies.

This is why Wall Street financial giant Morgan Stanley has recently released a research report stating that it is very optimistic about cooperation between China and the United States in the field of electric vehicles. The institution stated that the automotive industry relationship between China and the United States may have passed its lowest point, and despite ongoing national competition, it is expected that Washington and Beijing will continuously explore cooperation in the field of electric vehicle technology. Morgan Stanley stated in the research report that electric vehicles (EV) are the physical interface of AI brains, and as the automotive industry evolves from "unconnected rolling metal boxes" to AI-empowered AI agent paths at an accelerated pace, the global automotive market structure, supply chain composition, and regulatory environment are undergoing profound changes. "It is too early to assert that the Chinese and American EV markets will be completely separated. Discussions with executives of Western car companies show that cooperation with Chinese car companies is necessary. The consensus is that a cooperation path exists while safeguarding the national security interests of each country, and this heavyweight collaboration may be about to begin." Based on expectations of technological cooperation between electric vehicle-related companies in China and the United States, Morgan Stanley is especially optimistic about the performance and stock price prospects of American electric vehicle companies with exposure to the Chinese market, such as Tesla, Inc. based on Tesla, Inc.'s exclusive advantage in the field of intelligent driving. Particularly when Tesla, Inc. completes sensitive technological cooperation such as cloud-based training data storage cooperation with Chinese technology companies and domestic intelligent driving mapping database cooperation, the "full version Tesla, Inc. FSD" entering the Chinese market is expected to further enhance Tesla, Inc.'s competitiveness compared to many inexpensive Chinese car models equipped with intelligent driving technology, thereby boosting demand in the Chinese market. Morgan Stanley is bullish on Mobileye Global, based on this company's long-standing automatic driving business exposure in China. It continues to be bullish on Lear Corporation, Ford, General Motors Company, and Ferrari NV based on the increasingly optimistic revenue prospects brought about by the deep cooperation between these car companies and Chinese car companies in the fields of intelligent driving, electric vehicle manufacturing, and electric vehicle supply chain. BYD Company Limited "God's Eye" opens the era of equal rights for intelligent driving, leading the world in Intelligent Driving Chinese car giant BYD Company Limited made a major move in intelligent driving in February by releasing the advanced intelligent driving system "God's Eye." This has intensified the competition in intelligent driving in the race track, especially in China, faced by Tesla, Inc. and the three major traditional American automotive giants Ford Motor Company, General Motors Company, and Stellantis. Morgan Stanley states that China may have already won the competition in electric cars for economic models based on AI-driven intelligent driving technology and the world's most efficient electric vehicle manufacturing chain. Compared to the Enhanced Autopilot (EAP) available in the North American market, which is more advanced than the EAP system of Tesla, Inc. and priced at over 200,000 RMB for Tesla, Inc.'s Model series, BYD Company Limited has completely broken the pattern that intelligent driving equals high prices in the electric vehicle competition. The EAP system of Tesla, Inc. does not have a cost-effective advantage compared to many new electric vehicle players in the Chinese intelligent driving market, including "Weilan Li". The pattern of "intelligent driving equals high prices" in the automotive market is being broken by BYD Company Limited. In a recent important press conference with the theme of "equal rights for intelligent driving", BYD Company Limited announced that vehicles above the 100,000 RMB level will all come standard with the advanced intelligent driving system "God's Eye", and even models starting at around 70,000 RMB will be equipped with God's Eye. BYD Company Limited's "God's Eye" has truly opened the era of intelligent driving for all. It is worth noting that BYD Company Limited's most affordable model, the Seagull, is also equipped with the advanced intelligent driving system. BYD Company Limited has promoted intelligent driving to the A00 level small cars starting at 70,000 RMB, which is like dropping a "super nuclear bomb" for the domestic car market, especially for Tesla, Inc., which is committed to introducing FSD into China but is priced much higher.After Morgan Stanley fully watched the BYD Company Limited "Heavenly Eye" press conference, he sighed and left behind the three giants of Detroit, as well as the electric car leader Tesla, Inc., that there is not much time left for their response to "smart driving for all". Although under the backdrop of the "reshoring of manufacturing to the United States" policy led by the Trump administration, the Detroit Three giants - Ford Motor Company, General Motors Company, and Stellantis - are expected to continue to consolidate their market share in the US car market, but the sales of these three giants in one of the key markets, China, may continue to be eroded by the leading electric car force of BYD Company Limited, thereby continuously lowering the market value of these three major automobile companies. After all, with a price of around 100,000 RMB and equipped with intelligent driving systems, it is very attractive to most Chinese consumers.Morgan Stanley is optimistic about the prospects of collaboration between American car companies and Chinese electric vehicle companies. The analyst team at Morgan Stanley stated that generative AI is intensifying the artificial intelligence technology gap between traditional car companies and new electric vehicle manufacturers, becoming a key catalyst for the global automotive industry structure and business model transformation. In a research report, Morgan Stanley stated that in the just concluded four quarters of earnings conference calls, traditional American car companies led by the "Detroit Three" (General Motors Company, Ford, and Stellantis) had fewer discussions on AI algorithm-based intelligent driving vehicles, indicating that their progress in this area is relatively slow. The report also mentioned that BYD Company Limited's "Eye of Wisdom" intelligent driving technology may be a "DeepSeek world-shocking moment" in the global autonomous driving field. Therefore, the absolute advantage of Chinese electric vehicle companies in "low-cost electric vehicle manufacturing" and "electric vehicle intelligent driving" may attract General Motors Company, Ford, Stellantis, and other American traditional car companies to collaborate with Chinese electric vehicle leaders in building car factories or comprehensive intelligent driving systems based on Chinese electric vehicle companies, helping these American traditional car companies gain more market share in the immensely huge Chinese electric vehicle market. The Morgan Stanley analysis team stated that although short-term U.S. electric vehicle sales have been negatively impacted by Trump policies/tariffs, the institution believes that this is only a temporary pause before the gradual increase in electric vehicle adoption rates from 2027 to 2030. "Electric vehicles (EVs) are the physical interface of AI brains. In our view, AI is driving full speed ahead towards autonomous driving, accelerating the commercialization of EVs. The view that the U.S. will maintain a fortress protecting fuel vehicles is fundamentally flawed. In addition, achieving vehicle affordabilitythe goal: price < $20,000, range > 300 miles, fast charging, advanced ADAS, an Audi-level experienceis likely to come from EVs, not fuel vehicles." Morgan Stanley believes that the popularization of electric vehicles (EVs) in the U.S. will inevitably involve Chinese elements. While the deep penetration of EVs into the U.S. market is expected to go through cycles of conflicting interests and protectionist measures, ultimately the widespread adoption of EVs in the U.S. will be driven by partnerships with Chinese battery/EV partners. Tesla, Inc. is very likely to play a key role in localizing Chinese BEV manufacturing technology. Morgan Stanley also believes that American traditional car companies can help Chinese car companies enter the Western markets as a return for assistance in implementing more efficient EV strategies.