Morgan Stanley experts caution that the United States’ ambitions in physical AI technology depend heavily on continued collaboration with Chinese companies. Although recent talks have eased tariff concerns, the firm suggests that attempting to relocate AI-adjacent production without Chinese involvement will be exceptionally challenging over the next five years.

Why Cooperation is Key

• Advanced Expertise in AI Components: China excels in precision components and semiconductor packaging, complementing U.S. strengths in AI software and systems integration.

• Trade Barriers: Despite tariff issues, U.S. consumers and OEMs will likely continue to seek advanced Chinese EV and robotics technologies, making complete detachment impractical.

• Collaborative Approach: Competition can coexist with strategic partnerships—shared supply chains could lower costs and accelerate expansion.

Tesla: A Potential Liaison

Morgan Stanley highlights Tesla (NASDAQ:TSLA) as uniquely positioned to bridge the integration of Chinese manufacturing into American markets:

• Leverage Gigafactory: Tesla’s local production can effectively incorporate Chinese-made battery cells and Powerwall modules.

• High Demand for EVs: The American market’s desire for quality electric vehicles makes Tesla a strategic distributor for components designed in China.

• Collaborative Initiatives: Ongoing trials for joint robotics automation are already being conducted at the Fremont and Shanghai facilities.

To track Tesla’s efficiency and margin trends versus its competition, analysts often utilize the Ratios (TTM) API for up-to-date metrics on profitability and leverage.

Understanding Investment Risks

• Capital Expenditure Needs: Upgrading facilities for AI production will require solid balance sheets and access to credit.

• Changing Regulations: Shifting towards tech-transfer agreements may redefine cost structures and impact profitability.

• Credit Ratings: Companies heavily leveraged in cross-border manufacturing could see rating changes tied to geopolitical developments.

Investors focused on Tesla’s financial health and debt levels can monitor credit ratings through the Company Rating API as geopolitical dynamics fluctuate.