Morgan Stanley Reaffirms Tesla’s $410 PT
Morgan Stanley analyst Adam Jonas reaffirmed on May 27, 2025 a price target of $410 on Tesla, maintaining a ‘Buy’ rating on the stock.
“Humanoids, Magnets and National Security
The US economy runs on magnets.
High end magnets require rare earths (NdPr, Dysprosium, Terbium).
China controls 65% of mining/88% of refining of rare earths, exposing US national security vulnerabilities in the time of tariffs.
Our Sydney-based Materials analyst Rahul Anand led a comprehensive Global Insight report on supply and demand implications for critical minerals given the forthcoming growth in humanoid robots.
We wanted to summarize the key insights from this report and other factors that we believe deserve investor attention during a time of accelerated geopolitical and technological changes.
Why do magnets matter? There are far too many consumer and industrial applications requiring a steady supply of magnets to list here (electric motors, gadgets, material handling, communication equipment, computers, medical equipment, energy generation, mining, transportation, military, just to name a few).
But think of it this way. Anything that moves or involves electricity is likely dependent on magnets. Permanent magnets used in higher value devices require rare earths.
We recently spoke with an executive of a major US-based global OEM responsible for global supply chain including magnets.
This company uses 192 tiny magnets that go into EV motors as well as in hull sensors, proximity sensors, seat belt retractors, induction coils, starter motors, steering motors, speakers and many other applications in an automobile.
A ‘heavy’ problem… Permanent magnets for EV motors use both light and heavy (Terbium, Dysprosium) rare earths.
Heavy (Tb/Dy) rare earths are used in trace amounts (3 or 4% of the material, but can account for 70% of the magnetic properties).
In higher temperatures (>100 degrees), the lighter materials can lose their magnetic properties.
The addition of heavy materials is used as a ‘doping’ agent to optimize magnet performance under these conditions.
According to a recent discussion with an expert on the topic, the processing of light rare earth is not a ‘huge’ issue.
It’s the processing of the heavies that’s more challenging with uranium and thorium as a by product which must be dealt with or discarded.
Additionally, not as many ore bodies contain heavy rare earths.
China in ‘pole’ position. We estimate that Chinese or Chinese owned enterprises currently control mined and refined supply to the tune of 65%/88% for rare earths which creates an urgent need for supply chain diversification for wester producers.
China’s recent export ban on rare earths require a license regime to continue supply.
What’s the US response? While the situation remains fluid, we understand there have been stoppages and other disruptions from Chinese supply.
Auto companies source permanent magnets up to Tier 4/Tier 5 suppliers.”
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