Investing.com -- Morgan Stanley analysts believe China is leading the global EV race, but the battle for autonomy is just beginning.
"In our view, China is winning in EV. Who will win the autonomy race?" asked Morgan Stanley in a note Wednesday.
The firm pointed to Xiaomi’s first electric vehicle, the SU7, as an example of China’s strength in the sector.
"You can tell a lot about the strength of a nation’s product when another country slaps a 100% tariff on it before it even goes on sale," said Morgan Stanley.
They noted that Ford CEO Jim Farley acknowledged Xiaomi’s competitiveness, stating, "It’s management’s responsibility to beat the SU7 straight up in a street fight."
Despite geopolitical tensions, Chinese EVs could eventually be manufactured in the U.S., according to Morgan Stanley.
"Most expect Chinese EVs will indeed eventually make it to US consumers—locally sourced, of course," they wrote, citing an auto executive who remarked, "You can’t expect to keep the world’s best EVs from the best consumer."
Meanwhile, Tesla (NASDAQ:TSLA) is taking an "all or nothing" approach to autonomy, Morgan Stanley said.
Elon Musk recently confirmed that Tesla’s upcoming Cybercab will have no steering wheel, explaining it will "either self-drive or not drive at all."
On the technology front, Morgan Stanley notes that Tesla continues to shun LIDAR, unlike its competitors.
As the EV and autonomy races evolve, Morgan Stanley emphasized that investors should watch the sector closely, particularly as Tesla and Chinese automakers push forward in different ways.