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Investing.com -- Tesla may now be more important than ever to Elon Musk, according to Morgan Stanley (NYSE:MS) analysts, who say the electric vehicle maker is key to U.S. competitiveness in artificial intelligence and robotics.

"Elon Musk runs 5 companies... He has control of the 4 private ones but owns just 13%... of the public one," the bank wrote. "In our view, Tesla (NASDAQ:TSLA)’s expertise in manufacturing, data collection, robotics/physical AI, energy, supply chain and infrastructure are more critical than ever before to put the U.S. on an even footing with China in embodied AI."

The firm’s latest note outlines 11 developments shaping Tesla’s trajectory. These range from China’s gamified humanoid robot races—dubbed the “Humanoid Olympics”—to the sharp EV price cuts from BYD (SZ:002594), which slashed prices on some models by up to 30%, pushing Tesla further into what the note called the “race to the bottom.”

Morgan Stanley explains that Tesla is leaning harder into AI, including through deeper integration with Musk’s xAI venture. 

“We see the intelligent robot as benefiting not just from the capture of photons and manipulation of atoms in the physical world but also the capture and ’context’ of data from the digital world and omniverse,” Morgan Stanley wrote.

The firm also highlighted Tesla’s ongoing role in cross-pollinating Musk’s ventures: “Grok in the car. SpaceX on your Cybertruck. Optimus prosthetics on Neuralink patients.”

Despite stiff global competition and internal stretch, Musk recently said Tesla was "stretched pretty thin." Morgan Stanley reaffirmed its Overweight rating and $410 price target on the stock, writing: “The challenges facing Tesla’s current business are widely reported s are widely reported and well known, while the opportunities in the future business are potentially greatly underestimated.”

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